Fortnightly - American Municipal Powerhttp://www.fortnightly.com/tags/american-municipal-power
enVendor Neutralhttp://www.fortnightly.com/fortnightly/2011/06/vendor-neutral
<div class="field field-name-field-import-category field-type-text field-label-inline clearfix"><div class="field-label">Category:&nbsp;</div><div class="field-items"><div class="field-item even">Vendor Neutral</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - June 2011</div></div></div><div class="field field-name-field-import-image field-type-image field-label-above"><div class="field-label">Image:&nbsp;</div><div class="field-items"><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/1106-VENpic1.jpg" width="1200" height="800" alt="ABB is investing $90 million to build a new high-voltage cable factory in Huntersville, N.C." title="ABB is investing $90 million to build a new high-voltage cable factory in Huntersville, N.C." /></div><div class="field-item odd"><img src="http://www.fortnightly.com/sites/default/files/1106-VENpic2.jpg" width="640" height="425" alt="Survalent Technology commissioned a new SCADA system for the Golden Spread Electric Cooperative Antelope Station. Antelope Station is a gas-fired power plant with 18 9-MW gensets capable of generating about 170 MW, allowing the plant to quickly respond to regional capacity requirements.The SCADA system includes Survalent’s open system applications." title="Survalent Technology commissioned a new SCADA system for the Golden Spread Electric Cooperative Antelope Station. Antelope Station is a gas-fired power plant with 18 9-MW gensets capable of generating about 170 MW, allowing the plant to quickly respond to regional capacity requirements.The SCADA system includes Survalent’s open system applications." /></div><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/1106-VENpic3.jpg" width="1008" height="692" alt="Dynamic Solar completed a 250-kW solar system in Philadelphia, Pa., for the Philadelphia Water Department. Dynamic Solar teamed with CETCO Contracting Services and Nucero Electric to design, engineer and install the 250-kW ground mounted system. The array is located at the Southeast Water Pollution Control Plant and is expected to generate approximately 330,000 kWh of solar electricity per year." title="Dynamic Solar completed a 250-kW solar system in Philadelphia, Pa., for the Philadelphia Water Department. Dynamic Solar teamed with CETCO Contracting Services and Nucero Electric to design, engineer and install the 250-kW ground mounted system. The array is located at the Southeast Water Pollution Control Plant and is expected to generate approximately 330,000 kWh of solar electricity per year." /></div><div class="field-item odd"><img src="http://www.fortnightly.com/sites/default/files/1105-VENpic4.jpg" width="730" height="547" alt="Chevron Mining Inc. recently began operating a 1-MW concentrating solar photovoltaic (CPV) power plant at the tailing site of its molybdenum mine in Questa, N.M. The 20-acre facility includes 172 solar trackers. Kit Carson Electric Cooperative is buying the output under a power purchase agreement." title="Chevron Mining Inc. recently began operating a 1-MW concentrating solar photovoltaic (CPV) power plant at the tailing site of its molybdenum mine in Questa, N.M. The 20-acre facility includes 172 solar trackers. Kit Carson Electric Cooperative is buying the output under a power purchase agreement." /></div><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/1105-VENpic5.jpg" width="922" height="1143" alt="Caithness Energy and GE Energy Financial Services sold part of the 845-MW Shepherds Flat wind project to Google, ITOCHU and Sumitomo." title="Caithness Energy and GE Energy Financial Services sold part of the 845-MW Shepherds Flat wind project to Google, ITOCHU and Sumitomo." /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><h4>T&amp;D</h4>
<p><span class="boldred">ABB</span> broke ground for a new high-voltage cable factory in Huntersville, N.C. The new facility, located at the Commerce Station Business Park, will supply high-voltage and extra high-voltage transmission cables to carry electric power underground. ABB says the factory will produce “smart grid-compliant cables,” for use in both AC and DC applications. ABB is investing approximately $90 million in the new manufacturing facility, which is the newest addition to Charlotte’s Energy Hub economic development initiative.</p>
<p><span class="boldred">ABB</span> launched its latest generation 245-kV ELK-14 series of gas insulated switchgear (GIS). ABB says the footprint of this latest GIS product is 40 percent smaller than conventional designs and it uses 20 percent less SF6 gas compared to the previous generation, making it more environmentally friendly. The unit can be delivered as an assembled bay, fully tested and mounted on a frame, which ABB says reduces installation time. Control and protection equipment installed in the control cubicle directly at the bay also is intended to enable smart grid integration. The systems were designed for a rated voltage of 253 kV, with a maximum current rating of 3,150 amps.</p>
<p><span class="boldred">Duke Energy</span> and <span class="boldred">American Transmission Co.</span> (ATC) created the Duke-American Transmission Co. (DATC), a joint venture that will build, own and operate new electric transmission infrastructure in North America. The joint venture will operate as a transmission utility. As a result, it will be subject to the rules and regulations of the Federal Energy Regulatory Commission, MISO, PJM and various other independent system (grid) operators, as well as any states in which DATC develops projects. Per the structure of their new joint venture, Duke Energy and ATC may continue to develop transmission projects independently. DATC will own all of the transmission assets it builds and operates. Equity ownership of DATC will be split equally between Duke Energy and ATC.</p>
<p><span class="boldred">Tres Amigas</span> awarded a $200 million contract to <span class="boldred">Alstom Grid</span> to deliver high-voltage direct-current (HVDC) converter and automation technology for the first stage of the Tres Amigas SuperStation project in New Mexico. The project aims to interconnect America’s three primary electricity grids, the Eastern (Southwest Power Pool), Western (Western Electricity Coordinating Council) and Texas (Electric Reliability Council of Texas) networks. Under the contract, Alstom Grid will supply a 750-MW, 345-kV DC converter scheme. Engineering design for the transmission interconnection is underway, with construction scheduled to commence by 2012, and commercial operations expected in 2014.</p>
<h4>Environmental</h4>
<p><span class="boldred">American Electric Power</span> (AEP) installed <span class="boldred">GE</span>’s ABMet wastewater bioreactor system at the utility’s Mountaineer coal-fueled power plant in New Haven, W.Va. The proprietary biological treatment system uses a special molasses-based product as a nutrient for microbes that reduce selenium, a constituent found in many coal-fired power plant water emissions. GE’s ABMet technology utilizes special strains of common, non-pathogenic microbes that facilitate conversion of soluble selenium into elemental selenium, which is removed from the system during periodic backwashing. The microbes, which are fed the molasses-based nutrient, are seeded in a bed of activated carbon that acts as a growth medium for the microbes to create a biofilm. Selenium-laden wastewater passes through this bioreactor and a reduction reaction occurs. Other than the addition of the nutrient, GE says the system will be self-sustaining once it’s established. Selenium is an element found in coal that is not consumed in the combustion process and typically can be found in several of a plant’s post-combustion waste streams. AEP is installing GE’s system to allow its 1,300-MW Mountaineer generating station to comply with a new discharge limit for selenium. Construction of AEP’s treatment facility began in July 2010. The system is scheduled to become operational by the end of 2011.</p>
<p><span class="boldred">TÜV SÜD America</span> announced that the <span class="boldred">Massachusetts Department of Environmental Protection</span> (MassDEP) approved the Massachusetts-based company as a verification body to provide verification services for the Massachusetts Greenhouse Gas (GHG) Reporting Program. The Global Warming Solutions Act (GWSA) required MassDEP to promulgate mandatory GHG reporting regulations.</p>
<h4>Smart Grid</h4>
<p><span class="boldred">ABB</span> won orders from <span class="boldred">CenterPoint Energy</span> for the latest Service Suite mobile workforce management software from Ventyx and for the FocalPoint business intelligence solution from ABB’s latest acquisition, Obvient. These will be integrated into CenterPoint’s advanced distribution automation system, based on ABB’s Network Manager distribution management system (DMS).</p>
<p>The governing board of the public-private <span class="boldred">Smart Grid Interoperability Panel</span> (SGIP) voted in favor of a new smart grid standard and a set of guidelines. The documents address the need for wireless communications among grid-connected devices, as well as the ability to upgrade household electricity meters as the smart grid evolves. The SGIP identified “Guidelines for Assessing Wireless Communications for Smart Grid Applications” and “Meter Upgradeability Standard” as critical needs for realizing a modern power grid.</p>
<h4>Generation</h4>
<p><span class="boldred">Survalent Technology</span> commissioned a new SCADA system for the Golden Spread Electric Cooperative Antelope Station. Antelope Station is a gas-fired power plant with 18 9-MW gensets capable of generating about 170 MW, allowing the plant to quickly respond to regional capacity requirements.The SCADA system includes Survalent’s open system applications.</p>
<p><span class="boldred">Dynamic Solar</span> completed a 250-kW solar system in Philadelphia, Pa., for the Philadelphia Water Department. Dynamic Solar teamed with CETCO Contracting Services and Nucero Electric to design, engineer and install the 250-kW ground mounted system. The array is located at the Southeast Water Pollution Control Plant and is expected to generate approximately 330,000 kWh of solar electricity per year.</p>
<p><span class="boldred">Chevron Mining Inc.</span> recently began operating a 1-MW concentrating solar photovoltaic (CPV) power plant at the tailing site of its molybdenum mine in Questa, N.M. The 20-acre facility includes 172 solar trackers. Kit Carson Electric Cooperative is buying the output under a power purchase agreement.</p>
<p><span class="boldred">Dominion Virginia Power</span> is planning to convert three 63-MW power stations from using coal to biomass. The power stations in Altavista, Hopewell and Southampton County are identical and went into operation in 1992, providing peaking power supplies. When converted, they would generate 50 MW each, but operate as a base-load resource. The facilities will be fueled with logging waste. Pending approvals from the Virginia Department of Environmental Quality and the Virginia State Corporation Commission, the facilities could begin burning biomass in 2013.</p>
<p><span class="boldred">NextEra Energy Resources</span> entered a power purchase agreement with <span class="boldred">Google Energy</span> to purchase 100.8 MW of capacity from NextEra Energy Resources’ Minco II Wind Energy Center, currently under development in Grady and Caddo counties in Oklahoma. The project is comprised of 63 GE 1.6-MW wind turbines and is expected to be operational by the end of 2011. This is the second power purchase agreement for wind energy between the two companies. Google Energy also purchases 114 MW from NextEra Energy Resources’ Story II Wind Energy Center located in Story and Hardin counties in Iowa.</p>
<p><span class="boldred">Fotowatio Renewable Ventures</span> (FRV) closed financing and began construction on the 30-MW Webberville solar project, one of the largest solar PV systems in the United States. The project, located near Austin, Texas, is scheduled to be operational by year-end. <span class="boldred">Renewable Energy Systems Americas</span> (RES Americas) was selected to construct the project and provide operations and maintenance services for five years. Austin Energy will buy the plant’s output under a 25-year power purchase agreement. FRV partnered with Bayerische Landesbank (BayernLB), which underwrote the project construction debt. The project will use crystalline 270-Watt photovoltaic modules from Trina Solar.</p>
<p><span class="boldred">The Solar Electric Power Association</span> (SEPA) announced five utility groups have joined SEPA: American Municipal Power (AMP); City of Lake Worth, Fla.; Central Hudson Gas &amp; Electric (CH Energy Group); Greenwood Utilities Commission; South Mississippi Electric Power Association. SEPA says its utility membership now represents more than 95 percent of the nation’s installed solar capacity and 47 percent of all U.S. electric customers.</p>
<p><span class="boldred">Solar Power Partners</span> (SPP) and <span class="boldred">JCM Capital</span> have signed an agreement with <span class="boldred">Solar Power Network</span> (SPN), to provide full project financing for up to 20 MW of commercial-scale rooftop installations to be located throughout southwestern Ontario. The agreement follows the recent Solar Power Partners and JCM Capital announcement on the launch of their fund to develop, finance, own, and operate 200 MW of solar projects in Ontario. The SPN contract brings the current fund volume to 50 MW. SPP and JCM have already initiated 20 MW of projects that will start construction in 2011. The fund focuses on the installation of solar projects on large commercial and industrial buildings across Ontario, using the province’s feed-in-tariff program via solar PPAs with the Ontario Power Authority.</p>
<p><span class="boldred">Boeing</span> and <span class="boldred">South Carolina Electric &amp; Gas</span> (SCE&amp;G) created an energy partnership that will enable Boeing South Carolina to operate as a 100 percent renewable energy site. Renewable energy will be generated at the North Charleston site in part with thin-film solar laminate panels owned, installed and maintained by SCE&amp;G on the new Boeing 787 Final Assembly building roof. Under the arrangement, SCE&amp;G will install the solar generation system and dedicate the power from the system to the Boeing site. SCE&amp;G will then supplement the solar generated energy with power from its system resources, coupled with renewable energy certificates from its renewable generating facility, to meet all of Boeing’s energy requirements.</p>
<p><span class="boldred">Constellation Energy</span> and <span class="boldred">Holyoke Gas &amp; Electric Department (HG&amp;E)</span> are developing a new 4.5-MW solar installation that will generate electricity for Holyoke. Constellation Energy will build, own and maintain the system, and HG&amp;E will purchase the output under a 20-year PPA at a fixed cost that Constellation says is less than projected market rates. HG&amp;E’s solar power system will include 18,400 SolarWorld photovoltaic ground-mounted panels at two locations. The system is scheduled for commercial operation in summer 2011.</p>
<p><span class="boldred">Hartz Solar Hamilton</span>, a wholly-owned subsidiary of Hartz Mountain Industries, selected <span class="boldred">RMT Inc.</span> to design and construct its Hamilton solar project. The facility, nominally rated at 7.5 MW AC, is located in Hamilton Township, Mercer County, N.J. RMT says it will begin construction in June, with commissioning in November. RMT is responsible for engineering, procurement, and construction (EPC) of the foundations and racking systems, the PV modules, the DC and AC collector systems, the SCADA system, and testing and commissioning. The project will involve installation of more than 30,000 Suntech 280-Watt crystalline PV modules.</p>
<p><span class="boldred">The California Public Utilities Commission</span> (CPUC) approved <span class="boldred">Pacific Gas &amp; Electric</span>’s 20-year contract to purchase 150 MW of solar power from <span class="boldred">Sempra Generation</span>’s Mesquite Solar 1 PV power facility in Arizona. Mesquite Solar 1 is the first phase of Sempra Generation’s planned 700-MW Mesquite Solar complex located 40 miles west of Phoenix. With approval of the contract secured, the company plans to begin construction in June.</p>
<p><span class="boldred">San Diego Gas &amp; Electric (SDG&amp;E)</span> and subsidiaries of <span class="boldred">Soitec Solar Development</span> signed three contracts with a combined capacity of 30 MW of solar energy. The electricity will be generated at three solar power plant sites in San Diego County that will use Soitec CPV modules to be manufactured in a new factory being built in the San Diego area. The contracts require approval from the California Public Utilities Commission.</p>
<p><span class="boldred">San Diego Gas &amp; Electric (SDG&amp;E)</span> entered a 20-year contract for up to 156 MW of power supplied from the first phase of Sempra Generation’s Energía Sierra Juárez wind project in Baja California, Mexico. Both SDG&amp;E and Sempra Generation are subsidiaries of Sempra Energy. SDG&amp;E selected Energía Sierra Juárez as part of the utility’s 2009 competitive solicitation for renewable resources. The project was compared to other competitive bids, and the process was overseen by an independent evaluator, as required by the California Public Utilities Commission (CPUC). The contract is subject to approval by the CPUC and Federal Energy Regulatory Commission. Construction on Energía Sierra Juárez 1, about 70 miles east of San Diego and just south of the U.S.-Mexico border, is expected to begin in 2012.</p>
<p><span class="boldred">Ocean Power Technologies</span> (OPT) awarded four contracts to Oregon companies in connection with the manufacturing of its PB150 PowerBuoy wave energy generating device. The four companies receiving contracts are: American Bridge Manufacturing, Oregon Iron Works, Cascade General (a subsidiary of Vigor Industrial), and Sause Bros. Inc. After the initial PowerBuoy is deployed and tested off the coast of Reedsport, expected later this year, OPT plans to construct the first commercial-scale wave power station in the United States, consisting of up to nine additional PowerBuoys and grid connection infrastructure, subject to receipt of all necessary regulatory approvals and additional funding.</p>
<p><span class="boldred">Areva Solar</span> was awarded a major contract to install a 44-MW solar thermal augmentation project at a 750-MW coal-fired power station in Queensland, Australia. Areva says the project is the largest solar project in the Southern Hemisphere and the world’s largest solar power augmentation project at a coal-fired facility. Areva Solar will use its Australian-pioneered compact linear Fresnel reflector (CLFR) technology at CS Energy’s Kogan Creek Power Station. Construction is scheduled to begin in the first half of 2011, with commercial operation planned for 2013.</p>
<p><span class="boldred">Sempra Generation</span> entered a 20-year contract to sell 21 MW of wind energy to <span class="boldred">Maui Electric Company</span> from the Auwahi Wind project on the Ulupalakua Ranch in the southeastern region of Maui. The project is currently undergoing environmental review by Maui County, and state and federal agencies. Construction is expected to begin in early 2012.</p>
<h4>DR and Customer Systems</h4>
<p><span class="boldred">Baltimore Gas and Electric</span> (BGE) selected Opower’s Advanced Customer Engagement (ACE) platform as the front-end solution for its upcoming smart meter rollout. Opower’s ACE platform takes individual and neighborhood energy-usage data and transforms it into personalized reports that help customers understand their own energy usage more clearly. The reports also offer advice on ways to reduce energy use, helping customers lower their gas and electricity bills.</p>
<p><span class="boldred">Con Edison</span> added Apogee’s online tools to its website, <a href="http://www.conEd.com">www.conEd.com</a>, as part of its “The Power of Green” campaign, to help customers evaluate their energy use and find ways to save on their energy costs. The Energy Toolkit provides answers to energy questions; the HomeEnergyCalculator analyzes the customer’s energy use and makes recommendations for savings; and specialized calculators allow customers to run what-if scenarios on the use of lighting, appliances, TVs, and thermostat settings.</p>
<p><span class="boldred">GreenHouse Holdings</span> announced a partnership with <span class="boldred">EnergyConnect</span>. Together, the companies will offer customers integrated energy management and automated demand response (auto-DR) services. Under the terms of the agreement, GreenHouse will offer its auto-DR services to EnergyConnect’s customers, and EnergyConnect will market its products to Greenhouse’s customer base.</p>
<p><span class="boldred">SavWatt USA</span> subsidiary <span class="boldred">Pro EcoSolutions</span> entered a non-exclusive agreement with <span class="boldred">Comverge</span> and <span class="boldred">Con Edison</span> to implement their targeted demand side management program, which offers incentives for upgrading to more energy efficient equipment. Pro EcoSolutions will work with New York City businesses to replace existing incandescent bulbs, subsidize the cost of lighting, and administer the installation. Con Edison will be paying Pro EcoSolutions 65 cents per Watt saved.</p>
<h4>Metering</h4>
<p><span class="boldred">Kansas City Board of Public Utilites</span> (KCBPU) selected <span class="boldred">Elster</span> for the utility’s smart grid deployment. KCBPU will implement Elster’s EnergyAxis to streamline business and operational processes. The municipal utility plans to deploy more than 69,000 of Elster’s smart electric meters and 55,000 Elster smart water meters over the next few years.</p>
<p><span class="boldred">Comision Federal de Electricidad</span> (CFE) selected <span class="boldred">Elster</span>’s EnergyAxis smart grid solution to power the utility’s first advanced metering infrastructure (AMI) project in Mexico City. The Mexican Secretaria de Energia (SENER) and CFE will use the EnergyAxis pilot as a benchmark for evaluating Elster’s technologies for potential future deployments. CFE has already deployed nine other EnergyAxis systems throughout 14 of Mexico’s 16 service areas.</p>
<p><span class="boldred">BC Hydro</span> awarded a $270 million contract to <span class="boldred">Itron</span> to supply smart metering and meter data management systems. Itron will provide its OpenWay smart meters, run over a multi-application communication network powered by Cisco.</p>
<h4>EVs and Storage</h4>
<p><span class="boldred">Duke Energy</span> plans to store electricity generated at its Notrees Windpower project in west Texas using an energy storage and power management system developed by Austin-based <span class="boldred">Xtreme Power</span>. Duke Energy will work with the Energy Reliability Council of Texas (ERCOT) to integrate the wind power and battery storage system into the state’s independent power grid. The Electric Power Research Institute (EPRI) will advise the project team, collect data and help assess the potential for broader adoption of energy storage solutions throughout the industry. Duke Energy is targeting an in-service date for the battery storage system by late 2012.</p>
<p><span class="boldred">Siemens Energy</span> was commissioned to install five multi-level electric vehicle (EV) charging stations to support Loudoun County, Va.’s new commuter park-and-ride lot in Scott Jenkins Memorial Park. Siemens multi-level charging stations are designed for public outdoor applications. The stations deliver Level II charging and Level I charging through two separate outputs, which can deliver energy simultaneously. Siemens’ EV charging stations will be equipped with connectivity via the ChargePoint Network, which allows access to all manufacturers of vehicle charging stations, provides station monitoring and driver support, and mobile apps for station status and charging notifications. The stations were scheduled to be installed at the Loudoun County park in May 2011.</p>
<p>The <span class="boldred">EA Technology Group</span> collaborated with <span class="boldred">Energetix Pnu Power</span> to market compressed air batteries worldwide. Headquartered close to Energetix Pnu Power in Capenhurst, U.K., EA Technology will use its network of offices in the United States, China, Middle East and Australia, together with 35 distribution partners, to develop sales of Pnu Power products in a range of power backup and uninterruptible power supply applications. These include utility switching, industrial processes and data centers.</p>
<p><span class="boldred">Newmark Energy Solutions</span> (NES) formed strategic relationships with <span class="boldred">UTC Power Corp.</span> (UTC), <span class="boldred">Newmark Knight Frank</span>, and <span class="boldred">Austin Energy Partners Solutions</span> (AEP) to market, deliver, maintain and warranty fuel cells to commercial real estate markets across the United States. NES distributes UTC Power stationary fuel-cell units in the United States, and plans to permit, design, finance, construct, and operate a fleet of UTC fuel cells, installing 20 MW of capacity each year. Under the strategic relationship with Newmark Energy Solutions, UTC will provide fuel-cell product and support, while Newmark brings commercial real estate resources and expertise. AEP is expected to provide risk management expertise.</p>
<h4>People</h4>
<p><span class="boldred">SightLogix</span> appointed <span class="boldred">Jack Tomarchio</span> to its board of directors. Tomarchio is a former deputy secretary for intelligence and analysis operations under Pres. George W. Bush. Before that Tomarchio practiced law with an expertise in national security issues. He recently retired as a colonel from the United States Army Reserve where his last assignment was with the United States Special Operations Command.</p>
<p><span class="boldred">Ross Malme</span> joined <span class="boldred">Skipping Stone</span> as a partner and member of the board of directors as an equity owner. Malme previously held executive-level roles with Schneider Electric’s demand response resource center, Enron Energy Services, Schlumberger and Chevron. Ross was also the founder and CEO of RETX, a demand response technology firm, which has since been acquired by Schneider Electric. He served as chairman of Peak Load Management Alliance (PLMA) and formed a global demand response initiative in conjunction with the International Energy Agency (IEA).</p>
<h4>M&amp;A</h4>
<p><span class="boldred">Google</span> and subsidiaries of <span class="boldred">ITOCHU</span> and <span class="boldred">Sumitomo</span> joined <span class="boldred">GE Energy Financial Services</span> and developer and managing member <span class="boldred">Caithness Energy</span> as owners of the 845-MW Shepherds Flat wind project under construction near Arlington, Ore. The three new participants are investing approximately $500 million in the $2 billion project. The Shepherds Flat wind project stretches across 30 square miles of Gilliam and Morrow Counties in north-central Oregon.</p>
<p><span class="boldred">Lincoln Renewable Energy</span><span class="boldred">(LRE) </span>closed a $41 million power sale and project finance deal with Macquarie Energy. As part of the deal, Macquarie will enter a long-term purchase agreement for power and renewable energy credits from LRE’s New Jersey Oak solar project, and Macquarie will provide construction financing and term debt. LRE will be the long-term owner of the facility. Quanta Services is building the plant and providing O&amp;M services under an EPC contract. The New Jersey Oak solar project is a 10-MW PV project to be constructed in Fairfield Township, Cumberland County. The project will consist of some 55,000 solar panels constructed on a 100-acre site and will connect to Atlantic City Electric’s distribution system when it’s completed late in 2011.</p>
<p><span class="boldred">Ioxus Inc</span>. received $21 million from Energy Technology Ventures, a GE-NRG Energy-ConocoPhillips joint venture; Northwater Capital through its Northwater Intellectual Property Fund; Aster Capital (representing Alstom, Schneider Electric and Rhodia); and return investor Braemar Energy Ventures. Ioxus will use this funding to develop its technology and expand sales, marketing and manufacturing to meet growing demand for ultracapacitors.</p>
<p><span class="boldred">Calico Energy Services</span> received financial backing from Point B Capital and engaged the services of Point B, a management consulting firm that specializes in strategic execution. The investment provides capital to accelerate the company’s growth, and will allow Calico to use Point B’s leadership and management consulting services.</p>
<p><span class="boldred">Nexamp</span> acquired <span class="boldred">SolVera Energy</span> as part of an initiative to grow its utility-scale and distributed renewable energy business. The company also formed into two new business units, Renewable Energy Solutions and Clean Energy Advisory Services, which is focused on energy efficiency consulting services for commercial and industrial customers.</p>
<p><span class="boldred">Pattern Energy</span> partnered with <span class="boldred">Samsung Renewable Energy</span> to acquire wind power projects in Ontario from Acciona and Boralex. These projects will be combined with Pattern and Samsung’s larger South Kent Wind Farm, which is under development. The 270 MW wind farm is located in the Regional Municipality of Chatham-Kent. Samsung and its partners have an agreement with the Province of Ontario to provide 2,500 MW of new renewable energy. The first phase involves 400 MW of wind power and 100 MW of solar power. The companies secured dedicated transmission capacity for these initial projects. Pattern and Samsung agreed to develop more than 500 MW of wind power using Ontario-made wind turbine components from the new factories in Tillsonburg and in Windsor.</p>
<p><span class="boldred">Pattern and Samsung</span> recently announced the acquisition of land from the Fargo Wind Project from <span class="boldred">Suncor Energy</span> and a nearby wind project development from <span class="boldred">Northland Power</span>.</p>
<p><span class="boldred">DeWind Co</span>, a wholly owned subsidiary of <span class="boldred">Daewoo Shipbuilding and Marine Engineering</span>, acquired the rights for the 20-MW Frisco wind project, located in the northern-most portion of Hansford County, Texas, from local developer Distributed Wind Systems. DeWind will install 10 of its 2-MW D8.2 wind turbines at the Frisco site, which is scheduled to be in commercial operation by the end of 2011. The D8.2 turbines will be furnished from DeWind assembly contractor TECO-Westinghouse located in Round Rock, Texas.</p>
<p><span class="boldred">PPL</span> completed its acquisition of the <span class="boldred">Central Networks</span> electricity distribution business, the second-largest such business in the United Kingdom. PPL, through a U.K. subsidiary, acquired Central Networks from E.ON UK plc for $5.7 billion in cash, inclusive of certain permitted pre-closing adjustments, and $800 million of existing public debt to be assumed through consolidation. To complete closing, PPL used acquisition financing under a syndicated bridge facility arranged by Bank of America Merrill Lynch and Credit Suisse. The permanent financing plan includes a combination of common stock, equity units and debt. PPL expects to complete the permanent equity financing in the second quarter of 2011 and the debt financing by the end of the year.</p>
<p>The boards of directors of <span class="boldred">Exelon</span> and <span class="boldred">Constellation Energy</span> agreed to combine the two companies in a stock-for-stock transaction. Under the terms of the transaction, Constellation investors would receive the equivalent of $38.59 a share, about an 18-percent premium. The combined entity would have a market value of roughly $34 billion. The resulting company would retain the Exelon name and be headquartered in Chicago. Exelon’s power marketing business (Power Team) and Constellation’s retail and wholesale business would be consolidated under the Constellation brand and be headquartered in Baltimore. Both companies’ renewable energy businesses also would be headquartered in Baltimore, and the three utilities within the new Exelon—BGE, ComEd and PECO—would remain standalone organizations.</p>
<p> </p>
</div></div></div><div class="field field-name-field-article-category field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Category (Actual): </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/article-categories/generation-markets">Generation &amp; Markets</a></li><li class="taxonomy-term-reference-1"><a href="/article-categories/td-grid">T&amp;D Grid</a></li><li class="taxonomy-term-reference-2"><a href="/article-categories/finance">Finance</a></li></ul></div><div class="field field-name-field-members-only field-type-list-boolean field-label-above"><div class="field-label">Viewable to All?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-article-featured field-type-list-boolean field-label-above"><div class="field-label">Is Featured?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-department field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Department: </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/department/vendor-neutral">Vendor Neutral</a></li></ul></div><div class="field field-name-field-fortnightly-40 field-type-list-boolean field-label-above"><div class="field-label">Is Fortnightly 40?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-law-lawyers field-type-list-boolean field-label-above"><div class="field-label">Is Law &amp; Lawyers:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-above clearfix">
<div class="field-label">Tags:&nbsp;</div>
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<a href="/tags/abb">ABB</a><span class="pur_comma">, </span><a href="/tags/abmet">ABMet</a><span class="pur_comma">, </span><a href="/tags/acciona">Acciona</a><span class="pur_comma">, </span><a href="/tags/aep">AEP</a><span class="pur_comma">, </span><a href="/tags/alstom">Alstom</a><span class="pur_comma">, </span><a href="/tags/alstom-grid">Alstom Grid</a><span class="pur_comma">, </span><a href="/tags/american-electric-power">American Electric Power</a><span class="pur_comma">, </span><a href="/tags/american-municipal-power">American Municipal Power</a><span class="pur_comma">, </span><a href="/tags/american-transmission">American Transmission</a><span class="pur_comma">, </span><a href="/tags/american-transmission-co">American Transmission Co.</a><span class="pur_comma">, </span><a href="/tags/ami">AMI</a><span class="pur_comma">, </span><a href="/tags/amp">AMP</a><span class="pur_comma">, </span><a href="/tags/apogee">Apogee</a><span class="pur_comma">, </span><a 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Bush</a><span class="pur_comma">, </span><a href="/tags/ghg">GHG</a><span class="pur_comma">, </span><a href="/tags/gis">GIS</a><span class="pur_comma">, </span><a href="/tags/global-warming-solutions-act">Global Warming Solutions Act</a><span class="pur_comma">, </span><a href="/tags/google">Google</a><span class="pur_comma">, </span><a href="/tags/google-energy">Google Energy</a><span class="pur_comma">, </span><a href="/tags/greenhouse-holdings">GreenHouse Holdings</a><span class="pur_comma">, </span><a href="/tags/greenwood-utilities-commission">Greenwood Utilities Commission</a><span class="pur_comma">, </span><a href="/tags/gwsa">GWSA</a><span class="pur_comma">, </span><a href="/tags/hartz-solar-hamilton">Hartz Solar Hamilton</a><span class="pur_comma">, </span><a href="/tags/hvdc">HVDC</a><span class="pur_comma">, </span><a href="/tags/hydro">Hydro</a><span class="pur_comma">, </span><a href="/tags/iea">IEA</a><span class="pur_comma">, </span><a href="/tags/international-energy-agency">International Energy Agency</a><span class="pur_comma">, </span><a href="/tags/interoperability">Interoperability</a><span class="pur_comma">, </span><a href="/tags/ioxus-inc">Ioxus Inc</a><span class="pur_comma">, </span><a href="/tags/iso">ISO</a><span class="pur_comma">, </span><a href="/tags/it">IT</a><span class="pur_comma">, </span><a href="/tags/itochu">ITOCHU</a><span class="pur_comma">, </span><a href="/tags/itron">Itron</a><span class="pur_comma">, </span><a href="/tags/jack-tomarchio">Jack Tomarchio</a><span class="pur_comma">, </span><a href="/tags/jcm-capital">JCM Capital</a><span class="pur_comma">, </span><a href="/tags/lincoln-renewable-energy">Lincoln Renewable Energy</a><span class="pur_comma">, </span><a href="/tags/macquarie-energy">Macquarie Energy</a><span class="pur_comma">, </span><a href="/tags/massachusetts-department-environmental-protection">Massachusetts Department of Environmental Protection</a><span class="pur_comma">, </span><a href="/tags/massachusetts-greenhouse-gas">Massachusetts Greenhouse Gas</a><span class="pur_comma">, </span><a href="/tags/massdep">MassDEP</a><span class="pur_comma">, </span><a href="/tags/maui-electric-co">Maui Electric Co</a><span class="pur_comma">, </span><a href="/tags/maui-electric-company">Maui Electric Company</a><span class="pur_comma">, </span><a href="/tags/merrill-lynch">Merrill Lynch</a><span class="pur_comma">, </span><a href="/tags/mesquite">Mesquite</a><span class="pur_comma">, </span><a href="/tags/mesquite-solar-1">Mesquite Solar 1</a><span class="pur_comma">, </span><a href="/tags/miso">MISO</a><span class="pur_comma">, </span><a href="/tags/mountaineer">Mountaineer</a><span class="pur_comma">, </span><a href="/tags/network">Network</a><span class="pur_comma">, </span><a href="/tags/new-haven">New Haven</a><span class="pur_comma">, </span><a href="/tags/new-jersey">New Jersey</a><span class="pur_comma">, </span><a href="/tags/newmark-knight-frank">Newmark Knight Frank</a><span class="pur_comma">, </span><a href="/tags/nexamp">Nexamp</a><span class="pur_comma">, </span><a href="/tags/nextera">NextEra</a><span class="pur_comma">, </span><a href="/tags/nextera-energy">NextEra Energy</a><span class="pur_comma">, </span><a href="/tags/nextera-energy-resources">NextEra Energy Resources</a><span class="pur_comma">, </span><a href="/tags/notrees-windpower">Notrees Windpower</a><span class="pur_comma">, </span><a href="/tags/nrg">NRG</a><span class="pur_comma">, </span><a href="/tags/nrg-energy">NRG Energy</a><span class="pur_comma">, </span><a href="/tags/ocean-power-technologies">Ocean Power Technologies</a><span class="pur_comma">, </span><a href="/tags/openway">OpenWay</a><span class="pur_comma">, </span><a href="/tags/opower">Opower</a><span class="pur_comma">, </span><a href="/tags/opt">OPT</a><span class="pur_comma">, </span><a href="/tags/ot">OT</a><span class="pur_comma">, </span><a href="/tags/pattern-energy">Pattern Energy</a><span class="pur_comma">, </span><a href="/tags/peco">PECO</a><span class="pur_comma">, </span><a href="/tags/pjm">PJM</a><span class="pur_comma">, </span><a href="/tags/pollution">Pollution</a><span class="pur_comma">, </span><a href="/tags/ppa">PPA</a><span class="pur_comma">, </span><a href="/tags/ppl">PPL</a><span class="pur_comma">, </span><a href="/tags/pv">PV</a><span class="pur_comma">, </span><a href="/tags/pv-systems">PV systems</a><span class="pur_comma">, </span><a href="/tags/quanta-services">Quanta Services</a><span class="pur_comma">, </span><a href="/tags/reliability">Reliability</a><span class="pur_comma">, </span><a href="/tags/renewable">Renewable</a><span class="pur_comma">, </span><a href="/tags/renewable-energy">Renewable Energy</a><span class="pur_comma">, </span><a href="/tags/renewable-energy-systems-americas">Renewable Energy Systems Americas</a><span class="pur_comma">, </span><a href="/tags/res">RES</a><span class="pur_comma">, </span><a href="/tags/res-americas">RES Americas</a><span class="pur_comma">, </span><a href="/tags/rmt-inc">RMT Inc.</a><span class="pur_comma">, </span><a href="/tags/ross-malme">Ross Malme</a><span class="pur_comma">, </span><a href="/tags/samsung-renewable-energy">Samsung Renewable Energy</a><span class="pur_comma">, </span><a href="/tags/san-diego-county">San Diego County</a><span class="pur_comma">, </span><a href="/tags/savwatt-usa">SavWatt USA</a><span class="pur_comma">, </span><a href="/tags/scada">SCADA</a><span class="pur_comma">, </span><a href="/tags/sce">SCE</a><span class="pur_comma">, </span><a href="/tags/schneider">Schneider</a><span class="pur_comma">, </span><a href="/tags/sempra">Sempra</a><span class="pur_comma">, </span><a href="/tags/sempra-energy">Sempra Energy</a><span class="pur_comma">, </span><a href="/tags/sempra-generation">Sempra Generation</a><span class="pur_comma">, </span><a href="/tags/sep">SEP</a><span class="pur_comma">, 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</span><a href="/tags/solar-power-partners">Solar Power Partners</a><span class="pur_comma">, </span><a href="/tags/south-mississippi-electric-power">South Mississippi Electric Power</a><span class="pur_comma">, </span><a href="/tags/southwest-power-pool">Southwest Power Pool</a><span class="pur_comma">, </span><a href="/tags/spp">SPP</a><span class="pur_comma">, </span><a href="/tags/storage">storage</a><span class="pur_comma">, </span><a href="/tags/sumitomo">Sumitomo</a><span class="pur_comma">, </span><a href="/tags/survalent-technology">Survalent Technology</a><span class="pur_comma">, </span><a href="/tags/technology">Technology</a><span class="pur_comma">, </span><a href="/tags/transmission">Transmission</a><span class="pur_comma">, </span><a href="/tags/tres-amigas">Tres Amigas</a><span class="pur_comma">, </span><a href="/tags/trina-solar">Trina Solar</a><span class="pur_comma">, </span><a href="/tags/utc-power">UTC Power</a><span class="pur_comma">, </span><a href="/tags/utc-power-corp">UTC Power Corp</a><span class="pur_comma">, </span><a href="/tags/webberville">Webberville</a><span class="pur_comma">, </span><a href="/tags/western-electricity-coordinating-council">Western Electricity Coordinating Council</a><span class="pur_comma">, </span><a href="/tags/wind">Wind</a><span class="pur_comma">, </span><a href="/tags/xtreme-power">Xtreme Power</a> </div>
</div>
Wed, 01 Jun 2011 04:00:00 +0000puradmin14100 at http://www.fortnightly.comVendor Neutralhttp://www.fortnightly.com/fortnightly/2011/05/vendor-neutral
<div class="field field-name-field-import-category field-type-text field-label-inline clearfix"><div class="field-label">Category:&nbsp;</div><div class="field-items"><div class="field-item even">Vendor Neutral</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - May 2011</div></div></div><div class="field field-name-field-import-image field-type-image field-label-above"><div class="field-label">Image:&nbsp;</div><div class="field-items"><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/1105-VENpic1.jpg" width="991" height="557" alt="Florida Gov. Rick Scott and Florida Senate President Mike Haridopolos were on hand to help Florida Power &amp; Light unveil what FPL called the first hybrid solar power plant in the world—FPL’s Martin Next Generation Solar Energy Center. Spanning approximately 500 acres in western Martin County, Fla., the 75-MW hybrid facility connects a field of more than 190,000 solar thermal mirrors with an existing combined-cycle natural gas power plant to reduce fossil fuel consumption. FPL expects the project to displace " title="Florida Gov. Rick Scott and Florida Senate President Mike Haridopolos were on hand to help Florida Power &amp; Light unveil what FPL called the first hybrid solar power plant in the world—FPL’s Martin Next Generation Solar Energy Center. Spanning approximately 500 acres in western Martin County, Fla., the 75-MW hybrid facility connects a field of more than 190,000 solar thermal mirrors with an existing combined-cycle natural gas power plant to reduce fossil fuel consumption. FPL expects the project to displace combustion of approximately 41 billion cubic feet of natural gas and more than 600,000 barrels of oil—saving customers approximately $178 million in fuel costs over the facility’s estimated 30-year lifetime. The project began initial operations in November 2010." /></div><div class="field-item odd"><img src="http://www.fortnightly.com/sites/default/files/1105-VENpic2.jpg" width="1500" height="898" alt="Columbia Power Technologies deployed its first SeaRay wave-power prototype system in Puget Sound. The sea trials represent a milestone in moving from the pre-commercial stage toward commercial viability for wave power, which generates electricity from ocean swells. Late last year, Columbia Power secured a $2 million Series A private equity infusion from the Oregon Angel Fund, and plans another investment round in 2011." title="Columbia Power Technologies deployed its first SeaRay wave-power prototype system in Puget Sound. The sea trials represent a milestone in moving from the pre-commercial stage toward commercial viability for wave power, which generates electricity from ocean swells. Late last year, Columbia Power secured a $2 million Series A private equity infusion from the Oregon Angel Fund, and plans another investment round in 2011." /></div><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/1105-VENpic3.jpg" width="229" height="354" alt="Energetix Pnu Power developed a range of compressed air batteries as direct replacements for conventional battery and flywheel power backup systems. Supplied as plug-and-play units from 3 kW to 200 kW, the batteries have been deployed by National Grid in the U.K. and United States. Energetix says the systems can be driven from industry standard compressed air cylinders with an auto compressor for recharging, or plant mains air supplies. Pnu Power has also developed a containerized backup power system using " title="Energetix Pnu Power developed a range of compressed air batteries as direct replacements for conventional battery and flywheel power backup systems. Supplied as plug-and-play units from 3 kW to 200 kW, the batteries have been deployed by National Grid in the U.K. and United States. Energetix says the systems can be driven from industry standard compressed air cylinders with an auto compressor for recharging, or plant mains air supplies. Pnu Power has also developed a containerized backup power system using a compressed air battery and a diesel generator." /></div><div class="field-item odd"><img src="http://www.fortnightly.com/sites/default/files/1105-VENpic4_0.jpg" width="730" height="547" alt="Prudent Energy received a grant from the California Public Utilities Commission (CPUC) toward construction and operation of a Vanadium Redox battery energy storage system (VRB-ESS) with SunPower’s PV systems. The grant and construction of the system will be completed in cooperation with SunPower, Pacific Gas and Electric (PG&amp;E), KEMA and Sandia National Laboratories. Prudent’s VRB-ESS energy storage system works similarly to a rechargeable fuel cell, where chemical energy is converted into electrical energy" title="Prudent Energy received a grant from the California Public Utilities Commission (CPUC) toward construction and operation of a Vanadium Redox battery energy storage system (VRB-ESS) with SunPower’s PV systems. The grant and construction of the system will be completed in cooperation with SunPower, Pacific Gas and Electric (PG&amp;E), KEMA and Sandia National Laboratories. Prudent’s VRB-ESS energy storage system works similarly to a rechargeable fuel cell, where chemical energy is converted into electrical energy in a quick manner." /></div><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/1105-VENpic5_0.jpg" width="922" height="1143" alt="The new 480 VAC Magnalight substation from Larson Electronics is designed for installations where native distribution power supply isn’t available." title="The new 480 VAC Magnalight substation from Larson Electronics is designed for installations where native distribution power supply isn’t available." /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><h4>Generation</h4>
<p>Florida Gov. Rick Scott and Florida Senate President Mike Haridopolos were on hand to help <span class="boldred">Florida Power &amp; Light</span> unveil what FPL called the first hybrid solar power plant in the world—FPL’s Martin Next Generation Solar Energy Center. Spanning approximately 500 acres in western Martin County, Fla., the 75-MW hybrid facility connects a field of more than 190,000 solar thermal mirrors with an existing combined-cycle natural gas power plant to reduce fossil fuel consumption. FPL expects the project to displace combustion of approximately 41 billion cubic feet of natural gas and more than 600,000 barrels of oil—saving customers approximately $178 million in fuel costs over the facility’s estimated 30-year lifetime. The project began initial operations in November 2010.</p>
<p><span class="boldred">San Diego Gas &amp; Electric (SDG&amp;E)</span> and a subsidiary of <span class="boldred">CSOLAR Development</span>, a renewable energy company managed by Tenaska Solar Ventures, announced a 25-year contract for up to 150 MW of solar energy to be generated at the Imperial Solar Energy Center West’s proposed 1,057-acre concentrated photovoltaic (CPV) power facility being built near El Centro, Calif. The project will connect with SDG&amp;E’s Imperial Valley substation and its output will be transmitted over the utility’s Sunrise Powerlink transmission line, currently under construction and slated for completion in 2012. Also in connection with the contract, Soltec will build a new factory in the San Diego region to manufacture proprietary CPV modules. With an annual production capacity of 200 MW, the new manufacturing facility will be able to supply other projects in the desert Southwest.</p>
<p>Solar developer <span class="boldred">BlueChip Energy (BCE)</span> acquired land adjacent to two utility substations in Lake County, Fla., for the development of a $200 million, 40-MW capacity solar farm. The project will deploy an estimated 140,000 solar panels and will be built in stages. Solar panels and racking systems are expected to be provided by <span class="boldred">Advanced Solar Photonics</span> (ASP), the manufacturing subsidiary of BCE, for 75 percent of the project. Additional equity partners are expected to provide the remaining 25 percent of the modules. The company had originally planned to lease the Lake County property but later decided to purchase the land in order to enhance the “bankability” of the project. The power produced is intended to be sold locally and regionally under power purchase agreements.</p>
<p><span class="boldred">CanTex Energy</span> completed the second installment of payments to <span class="boldred">Wind Tex Energy</span> for the exclusive rights to lease an additional 30,000 acres (total of 56,000 acres) of leases to the Lynn and Lenorah wind projects totaling 400 MW of capacity. The company says it will apply for an interconnect agreement and use existing transmission line capacity as part of a power purchase agreement in the Southwest Power Pool (SPP). Both projects will be able to supply into ERCOT when the Central location of the competitive renewable energy zone (CREZ) transmission line is completed by early 2013, connecting at the Long Draw 345 Kv switching station in Borden County, Texas. The project financing will require $25 million pre-construction and $810 million in construction financing. Plans are to install 2.75 MW or 3.0 MW turbines. </p>
<p> </p>
<p><span class="boldred">Juhl Wind</span> completed the $42 million Adams Wind Project in Meeker County in west-central Minnesota. The project, which was announced in December 2009, includes 12 Alstom Eco 86 wind turbines, to provide about 20 MW of wind capacity. <span class="boldred">Xcel Energy</span> will buy energy produced by the Juhl Wind project under a 20-year agreement. The wind farm is owned by local residents and farmers.</p>
<p><span class="boldred">WindTamer Corp.’s</span> board of directors approved changing the name of the company to Arista Power, Inc. The name change is subject to stockholder approval at the Annual Meeting of Stockholders to be held on May 18, 2011. The company will continue to use the “WindTamer” brand name on its wind turbines. The company intends to apply for a change in its ticker symbol immediately following stockholder approval of the name change.</p>
<p><span class="boldred">U.S. Energy Secretary Steven Chu</span> offered a conditional $102 million loan guarantee to support the Record Hill wind project, which includes a 50.6-MW wind farm and an eight-mile transmission line and associated interconnection equipment near the town of Roxbury, Maine. Developed and managed by <span class="boldred">Wagner Wind Energy</span> of New Hampshire and <span class="boldred">Independence Wind</span> of Maine, Record Hill is sponsored by the Yale University Endowment fund. The facility will consist of 22 <span class="boldred">Siemens</span> SWT-2.3-93 turbines and new transmission lines to interconnect with Central Maine Power. The turbines will be installed with turbine load control (TLC) technology, a system of sensors and processing software that allows the turbines to continue to generate electricity under turbulent conditions, rather than be shut down completely. TLC is also expected to reduce wear-and-tear on the turbines, reduce operation and management costs, and preserve the lifetime of the turbine components.</p>
<p><span class="boldred">GE</span> introduced its 4.1-113 wind turbine, a 4-MW-class machine designed for offshore use. GE signed a contract to supply a 4.1-113 wind turbine, along with associated services, to Göteborg Energi for installation in the Gothenburg, Sweden, harbor in the second half of 2011. The project is supported by the Swedish Energy Agency. GE says the direct-drive technology provides a simple, reliable design with built-in redundancy to ensure reliability at sea. Also the modular design is intended to simplify in-situ repair and reduce the need for large repair vessels. The new turbine builds on GE’s 3.5 MW direct-drive design.</p>
<p><span class="boldred">The U.S. Department of Energy’s National Renewable Energy Laboratory</span> (NREL) released its first call for proposals from wind industry companies interested in forming a partnership with NREL to test a multi-megawatt wind turbine drivetrain. The drivetrain will be tested in NREL’s new 5-MW drivetrain test facility, scheduled for completion by the end of June 2012.</p>
<p><span class="boldred">Siemens Energy’s Instrumentation</span>, Controls &amp; Electrical (IC&amp;E) Business Unit signed two new contracts for its plant-wide distributed control systems. Siemens will upgrade the existing control systems of five Oglethorpe Power Corp. (OPC) power plants in Georgia with the Siemens Power Plant Automation T3000 (SPPA-T3000) system. Additionally, Voith Hydro, Inc., sub-contractor for American Municipal Power (AMP), contracted Siemens to install and test its SPPA-E3000 electrical system at four new power houses of AMP’s 313-MW Ohio River project. The upgrades are scheduled to be implemented between March 2011 and March 2014.</p>
<p><span class="boldred">Columbia Power Technologies</span> deployed its first SeaRay wave-power prototype system in Puget Sound. The sea trials represent a milestone in moving from the pre-commercial stage toward commercial viability for wave power, which generates electricity from ocean swells. Late last year, Columbia Power secured a $2 million Series A private equity infusion from the Oregon Angel Fund, and plans another investment round in 2011.</p>
<h4>Metering</h4>
<p>Duke Energy chose Verizon Wireless to provide a telecommunications network for the Envision: Charlotte building efficiency project. Duke Energy will gather and aggregate energy usage data from about 70 participating buildings in Charlotte’s 1.94 square mile I-277 inner-belt loop. The information will then be streamed to large interactive lobby-level screens provided by Cisco. Building tenants will see the nearly real-time commercial energy consumption data for the community and suggested actions they can take to reduce their personal energy usage in the office.</p>
<p>DTE Energy plans to install an additional 350,000 electric meters to provide the backbone for its SmartCurrents program, which will allow electric customers to communicate with the company, provide detailed information about their energy usage and recognize power outages without customer input. DTE Energy has installed about 250,000 smart meters so far, and expects about 600,000 meters will be installed by early 2012.</p>
<p>The National Rural Telecommunications Cooperative (NRTC) entered a value-added reseller (VAR) agreement with Sensus. Through the partnership NRTC will offer Sensus smart grid technologies to its members including the FlexNet advanced metering infrastructure (AMI) system, smart meters, distribution automation and demand response solutions. In response to requests from co-op members for a wireless AMI solution, NRTC evaluated various technologies before partnering with Sensus.</p>
<p>SECO Energy selected Sensus as its smart grid technology provider. Sensus will provide the Florida cooperative its FlexNet AMI communications network and more than 172,000 electric meters equipped with remote connect and disconnect capabilities. SECO selected Sensus after a six-month pilot test of the FlexNet AMI network and 1,200 electric meters. SECO expects the smart grid program will help reduce the cost and staff time required for manual meter reads and will alert the utility about meter theft and tampering.</p>
<h4>Conservation &amp; Efficiency</h4>
<p><span class="boldred">Lockheed Martin</span> was selected to implement and manage the <span class="boldred">Con Edison</span> commercial and industrial (C&amp;I) energy efficiency programs. Con Edison promotes the program to C&amp;I customers in New York City and Westchester County.</p>
<p><span class="boldred">Servidyne</span> started work on an approximately $1.3 million energy efficiency project for <span class="boldred">Cobb County, Ga</span>. The project, which is being funded by the American Recovery and Reinvestment Act of 2009 (ARRA) through the energy efficiency and conservation block grant program, is expected to save Cobb County’s taxpayers at least $300,000 a year in avoided utility costs. The company expects to complete its project work by about September 2011.</p>
<p>The <span class="boldred">Montgomery County Correctional Facility</span> in Eagleville, Pa., awarded a contract to Honeywell to help upgrade its infrastructure and save an estimated $2.5 million in utility and operating costs. Honeywell says the $2.4-million energy conservation and building modernization program, which is supported by ARRA funds, will reduce water and energy consumption, and strengthen safety and security for staff and inmates at the 600-bed prison. Honeywell guarantees savings under a 10-year performance contract. Honeywell expects to complete the upgrades in the first half of 2011, with additional improvements planned to start by year’s end.</p>
<p><span class="boldred">Bluestone Energy Services</span> was selected by New Hampshire’s Pay for Performance (P4P) Program as an energy efficiency partner. The Pay for Performance Program is funded by proceeds from the auction of carbon allowances through New Hampshire’s participation in the Regional Greenhouse Gas Initiative (RGGI). Bluestone Energy recently completed an energy conservation project for Stonewall Kitchen’s Rochester, N.H. distribution center. The project saved 520,000 kWh and earned over $50,000 in utility incentives from PSNH.</p>
<p><span class="boldred">Ameresco</span> signed an energy saving performance contract with Monroe County (Mississippi) school district for six schools and facilities totaling 368,000 square feet. Initiatives include boiler replacements, lighting upgrades and water conservation measures. An ARRA grant provided 25 percent of total costs associated with the performance contract, with the other 75 percent being funded through a tax-exempt lease and paid for out of guaranteed energy savings.</p>
<h4>EVs &amp; Storage</h4>
<p><span class="boldred">DTE Energy</span> selected <span class="boldred">SPX Service Solutions</span> to provide turnkey electric vehicle (EV) home charging installation services for up to 2,500 residential customers participating in the utility’s EV rate pilot program. The program offers lower rates for customers to charge EVs, as well as company-provided charging stations and funding toward installation. SPX is expected to manage all aspects of home charging, including home surveys, 240-volt charging station installations, permitting, inspections, coordination with the utility, and post-installation services.</p>
<p><span class="boldred">Reno Contracting</span> entered into a strategic alliance with <span class="boldred">Envision Solar</span> to build integrated solar parking arrays for EVs in locations throughout the Southwest. Plans call for a first project during 2Q 2011.</p>
<p><span class="boldred">Energetix Pnu Power</span> developed a range of compressed air batteries as direct replacements for conventional battery and flywheel power backup systems. Supplied as plug-and-play units from 3 kW to 200 kW, the batteries have been deployed by National Grid in the U.K. and United States. Energetix says the systems can be driven from industry standard compressed air cylinders with an auto compressor for recharging, or plant mains air supplies. Pnu Power has also developed a containerized backup power system using a compressed air battery and a diesel generator.</p>
<p><span class="boldred">Prudent Energy</span> received a grant from the <span class="boldred">California Public Utilities Commission</span> (CPUC) toward construction and operation of a Vanadium Redox battery energy storage system (VRB-ESS) with SunPower’s PV systems. The grant and construction of the system will be completed in cooperation with SunPower, Pacific Gas and Electric (PG&amp;E), KEMA and Sandia National Laboratories. Prudent’s VRB-ESS energy storage system works similarly to a rechargeable fuel cell, where chemical energy is converted into electrical energy in a quick manner.</p>
<h4>Smart Grid and T&amp;D</h4>
<p><span class="boldred">Larson Electronics</span> introduced the Magnalight MGS-DC-30KVA-480-220-110, a heavy duty power distribution substation that converts single-phase or three-phase 480V AC electrical current to single-phase 120V AC and 240V AC. The substation is designed to supply current for operating equipment and lighting in areas where connection to native power is unavailable or not desired. This unit can be used to tap into 480V AC from a variety of sources including generators and direct grid power, which it then steps down to usable voltages, and includes a dedicated 480-volt feed through for connecting a welding station.</p>
<p><span class="boldred">Demand Response Coordinating Committee</span> (DRCC) is changing its membership structure to become a home for individuals that consider themselves DR and smart grid professionals. To reflect this change, the DRCC has changed its name to the Association for Demand Response &amp; Smart Grid (ADS).</p>
<p><span class="boldred">Infosys Technologies</span> and <span class="boldred">Oracle</span> completed a business transformation program incorporating the implementation of Oracle Utilities network management system at Seattle City Light, one of the nation’s largest municipally owned utilities. The Oracle system, selected in 2009, provides real-time information sharing to help Seattle City Light coordinate service restoration efforts.</p>
<p><span class="boldred">Elster</span> is working with <span class="boldred">Science Applications International Corp.</span> (SAIC) to deliver a comprehensive hosted smart grid solution that will empower utilities with a variety of advanced functionalities across electric, water and gas infrastructures. The full life-cycle offering will enable utility customers the opportunity to realize the benefits of smart grid as a service (SGaaS), such as demand response (DR), distribution automation (DA), meter data management (MDM), voltage conservation, transformer monitoring, EV charging and more. The joint solution will build on Elster’s EnergyAxis smart grid solution and SAIC’s Tier 3 SAS 70 Type II service.</p>
<p><span class="boldred">Progress Energy</span> selected <span class="boldred">IBM</span> as the lead systems integrator for the utility’s smart grid program. IBM will provide expertise in smart grid technologies; system planning, architecture, integration and implementation; business process design and development; and business analytics.</p>
<h4>M&amp;A</h4>
<p><span class="boldred">Alstom</span> acquired <span class="boldred">Utility Integration Solutions Inc.</span> (UISOL) of Santa Clara, California. UISOL, a systems integration company, develops and commercializes DRBizNet, a software platform for demand response management. UISOL will be a wholly-owned Alstom Grid subsidiary, maintaining its consulting and systems integration business lines, and will leverage Alstom’s worldwide presence to grow on international markets. Alstom Grid plans to invest in UISOL’s software division to expand its DRBizNet solution and meet growing customer requirements.</p>
<p><span class="boldred">DPL Inc.</span> purchased Chicago-based retail electricity supplier <span class="boldred">MC Squared Energy Services, LLC</span> (mc2), which serves approximately 2,000 customer accounts in northern Illinois. The transaction will be executed by DPL’s retail electric subsidiary, DPL Energy Resources (DPLER) as purchaser. Terms weren’t disclosed. DPLER markets electricity to commercial and business customers in Ohio.</p>
<p> </p>
<p><span class="boldred">TRC Companies</span> acquired privately-held <span class="boldred">Alexander Utility Engineering</span> (AUE) through a combination of cash, stock and subordinated debt. Headquartered in San Antonio, Texas, AUE is an engineering and design firm that provides a range of services to the electric utility and communications utility marketplaces. AUE’s revenue for 2010 was approximately $3 million. TRC expects the transaction to be accretive in fiscal 2011.</p>
<p> </p>
<p> </p>
</div></div></div><div class="field field-name-field-article-category field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Category (Actual): </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/article-categories/generation-markets">Generation &amp; Markets</a></li><li class="taxonomy-term-reference-1"><a href="/article-categories/td-grid">T&amp;D Grid</a></li><li class="taxonomy-term-reference-2"><a href="/article-categories/finance">Finance</a></li></ul></div><div class="field field-name-field-members-only field-type-list-boolean field-label-above"><div class="field-label">Viewable to All?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-article-featured field-type-list-boolean field-label-above"><div class="field-label">Is Featured?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-department field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Department: </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/department/vendor-neutral">Vendor Neutral</a></li></ul></div><div class="field field-name-field-fortnightly-40 field-type-list-boolean field-label-above"><div class="field-label">Is Fortnightly 40?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-law-lawyers field-type-list-boolean field-label-above"><div class="field-label">Is Law &amp; Lawyers:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-above clearfix">
<div class="field-label">Tags:&nbsp;</div>
<div class="field-items">
<a href="/tags/advanced-solar-photonics">Advanced Solar Photonics</a><span class="pur_comma">, </span><a href="/tags/alexander-utility-engineering">Alexander Utility Engineering</a><span class="pur_comma">, </span><a href="/tags/alstom">Alstom</a><span class="pur_comma">, </span><a href="/tags/alstom-grid">Alstom Grid</a><span class="pur_comma">, </span><a href="/tags/ameresco">Ameresco</a><span class="pur_comma">, </span><a href="/tags/american-municipal-power">American Municipal Power</a><span class="pur_comma">, </span><a href="/tags/american-recovery-and-reinvestment-act">American Recovery and Reinvestment Act</a><span class="pur_comma">, </span><a href="/tags/ami">AMI</a><span class="pur_comma">, </span><a href="/tags/amp">AMP</a><span class="pur_comma">, </span><a href="/tags/arra">ARRA</a><span class="pur_comma">, </span><a href="/tags/bc">BC</a><span class="pur_comma">, </span><a href="/tags/bluechip-energy">BlueChip Energy</a><span class="pur_comma">, </span><a href="/tags/bluestone-energy-services">Bluestone Energy Services</a><span class="pur_comma">, </span><a href="/tags/california-public-utilities-commission">California Public Utilities Commission</a><span class="pur_comma">, </span><a href="/tags/cantex-energy">CanTex Energy</a><span class="pur_comma">, </span><a href="/tags/central-maine-power">Central Maine Power</a><span class="pur_comma">, </span><a href="/tags/cisco">Cisco</a><span class="pur_comma">, </span><a href="/tags/commission">Commission</a><span class="pur_comma">, </span><a href="/tags/con-edison">Con Edison</a><span class="pur_comma">, </span><a href="/tags/conservation">Conservation</a><span class="pur_comma">, </span><a href="/tags/cpuc">CPUC</a><span class="pur_comma">, </span><a href="/tags/cpv">CPV</a><span class="pur_comma">, </span><a href="/tags/crez">CREZ</a><span class="pur_comma">, </span><a href="/tags/cso">CSO</a><span class="pur_comma">, </span><a href="/tags/csolar-development">CSOLAR Development</a><span class="pur_comma">, </span><a href="/tags/dc">DC</a><span class="pur_comma">, </span><a href="/tags/department-energy">Department of Energy</a><span class="pur_comma">, </span><a href="/tags/dg">DG</a><span class="pur_comma">, </span><a href="/tags/dpl">DPL</a><span class="pur_comma">, </span><a href="/tags/dpl-inc">DPL Inc.</a><span class="pur_comma">, </span><a href="/tags/dr">DR</a><span class="pur_comma">, </span><a href="/tags/dte-energy">DTE Energy</a><span class="pur_comma">, </span><a href="/tags/duke-energy">Duke Energy</a><span class="pur_comma">, </span><a href="/tags/e3">E3</a><span class="pur_comma">, </span><a href="/tags/elster">Elster</a><span class="pur_comma">, </span><a href="/tags/energetix-pnu-power">Energetix Pnu Power</a><span class="pur_comma">, </span><a href="/tags/energy-secretary-steven-chu">Energy Secretary Steven Chu</a><span class="pur_comma">, </span><a href="/tags/energyaxis-0">EnergyAxis</a><span class="pur_comma">, </span><a href="/tags/envision-solar">Envision Solar</a><span class="pur_comma">, </span><a href="/tags/ercot">ERCOT</a><span class="pur_comma">, </span><a href="/tags/ev">EV</a><span class="pur_comma">, </span><a href="/tags/evs">EVs</a><span class="pur_comma">, </span><a href="/tags/ge">GE</a><span class="pur_comma">, </span><a href="/tags/honeywell">Honeywell</a><span class="pur_comma">, </span><a href="/tags/hydro">Hydro</a><span class="pur_comma">, </span><a href="/tags/ibm">IBM</a><span class="pur_comma">, </span><a href="/tags/imperial-valley">Imperial Valley</a><span class="pur_comma">, </span><a href="/tags/independence-wind">Independence Wind</a><span class="pur_comma">, </span><a href="/tags/infosys">Infosys</a><span class="pur_comma">, </span><a href="/tags/infosys-technologies">Infosys Technologies</a><span class="pur_comma">, </span><a href="/tags/integration">Integration</a><span class="pur_comma">, </span><a href="/tags/iso">ISO</a><span class="pur_comma">, </span><a href="/tags/juhl-wind">Juhl Wind</a><span class="pur_comma">, </span><a href="/tags/kema">KEMA</a><span class="pur_comma">, </span><a href="/tags/larson-electronics">Larson Electronics</a><span class="pur_comma">, </span><a href="/tags/lockheed">Lockheed</a><span class="pur_comma">, </span><a href="/tags/lockheed-martin">Lockheed Martin</a><span class="pur_comma">, </span><a href="/tags/mc-squared-energy-services">MC Squared Energy Services</a><span class="pur_comma">, </span><a href="/tags/mdm">MDM</a><span class="pur_comma">, </span><a href="/tags/montgomery-county-correctional-facility">Montgomery County Correctional Facility</a><span class="pur_comma">, </span><a href="/tags/national-grid">National Grid</a><span class="pur_comma">, </span><a href="/tags/national-renewable-energy-laboratory-0">National Renewable Energy Laboratory</a><span class="pur_comma">, </span><a href="/tags/national-rural-telecommunications-cooperative">National Rural Telecommunications Cooperative</a><span class="pur_comma">, </span><a href="/tags/nrel-0">NREL</a><span class="pur_comma">, </span><a href="/tags/nrtc">NRTC</a><span class="pur_comma">, </span><a href="/tags/oracle">Oracle</a><span class="pur_comma">, </span><a href="/tags/oracle-utilities">Oracle Utilities</a><span class="pur_comma">, </span><a href="/tags/ot">OT</a><span class="pur_comma">, </span><a href="/tags/pacific-gas-and-electric">Pacific Gas and Electric</a><span class="pur_comma">, </span><a href="/tags/ppa">PPA</a><span class="pur_comma">, </span><a href="/tags/progress">Progress</a><span class="pur_comma">, </span><a href="/tags/progress-energy">Progress Energy</a><span class="pur_comma">, </span><a href="/tags/prudent-energy">Prudent Energy</a><span class="pur_comma">, </span><a href="/tags/pv">PV</a><span class="pur_comma">, </span><a href="/tags/pv-systems">PV systems</a><span class="pur_comma">, </span><a href="/tags/recovery">Recovery</a><span class="pur_comma">, </span><a href="/tags/regional-greenhouse-gas-initiative">Regional Greenhouse Gas Initiative</a><span class="pur_comma">, </span><a href="/tags/renewable">Renewable</a><span class="pur_comma">, </span><a href="/tags/renewable-energy">Renewable Energy</a><span class="pur_comma">, </span><a href="/tags/reno-contracting">Reno Contracting</a><span class="pur_comma">, </span><a href="/tags/rggi">RGGI</a><span class="pur_comma">, </span><a href="/tags/saic">SAIC</a><span class="pur_comma">, </span><a href="/tags/science-applications-international-corp">Science Applications International Corp</a><span class="pur_comma">, </span><a href="/tags/science-applications-international-corp-0">Science Applications International Corp.</a><span class="pur_comma">, </span><a href="/tags/seco-energy">SECO Energy</a><span class="pur_comma">, </span><a href="/tags/sensus">Sensus</a><span class="pur_comma">, </span><a href="/tags/servidyne">Servidyne</a><span class="pur_comma">, </span><a href="/tags/siemens">Siemens</a><span class="pur_comma">, </span><a href="/tags/siemens-energy">Siemens Energy</a><span class="pur_comma">, </span><a href="/tags/solar">Solar</a><span class="pur_comma">, </span><a href="/tags/solar-panels">solar panels</a><span class="pur_comma">, </span><a href="/tags/southwest-power-pool">Southwest Power Pool</a><span class="pur_comma">, </span><a href="/tags/spp">SPP</a><span class="pur_comma">, </span><a href="/tags/spx-service-solutions">SPX Service Solutions</a><span class="pur_comma">, </span><a href="/tags/steven-chu">Steven Chu</a><span class="pur_comma">, </span><a href="/tags/storage">storage</a><span class="pur_comma">, </span><a href="/tags/sunpower">SunPower</a><span class="pur_comma">, </span><a href="/tags/tenaska-solar-ventures">Tenaska Solar Ventures</a><span class="pur_comma">, </span><a href="/tags/trc">TRC</a><span class="pur_comma">, </span><a href="/tags/trc-companies">TRC Companies</a><span class="pur_comma">, </span><a href="/tags/us-department-energy">U.S. Department of Energy</a><span class="pur_comma">, </span><a href="/tags/us-energy-secretary-steven-chu">U.S. Energy Secretary Steven Chu</a><span class="pur_comma">, </span><a href="/tags/uisol">UISOL</a><span class="pur_comma">, </span><a href="/tags/utility-integration-solutions">Utility Integration Solutions</a><span class="pur_comma">, </span><a href="/tags/verizon">Verizon</a><span class="pur_comma">, </span><a href="/tags/verizon-wireless">Verizon Wireless</a><span class="pur_comma">, </span><a href="/tags/wagner-wind-energy">Wagner Wind Energy</a><span class="pur_comma">, </span><a href="/tags/wind">Wind</a><span class="pur_comma">, </span><a href="/tags/wind-tex-energy">Wind Tex Energy</a><span class="pur_comma">, </span><a href="/tags/xcel-energy">Xcel Energy</a> </div>
</div>
Sun, 01 May 2011 04:00:00 +0000puradmin14112 at http://www.fortnightly.comMerchant Power: Ratepayers Back At Riskhttp://www.fortnightly.com/fortnightly/2005/01/merchant-power-ratepayers-back-risk
<div class="field field-name-field-import-deck field-type-text-long field-label-inline clearfix"><div class="field-label">Deck:&nbsp;</div><div class="field-items"><div class="field-item even"><p>A review of power plant deals in 2004 shows that utilities are buying.</p>
</div></div></div><div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Jeff Bodington</p>
</div></div></div><div class="field field-name-field-import-bio field-type-text-long field-label-inline clearfix"><div class="field-label">Author Bio:&nbsp;</div><div class="field-items"><div class="field-item even"><p><strong>Jeff Bodington</strong> is a principal of financial advisory Bodington &amp; Co. in San Francisco. </p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - January 2005</div></div></div><div class="field field-name-field-import-image field-type-image field-label-above"><div class="field-label">Image:&nbsp;</div><div class="field-items"><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/0501-BIZ-table-1.jpg" width="1000" height="594" alt="Table 1 - Examples of Merchant Project Sales" title="Table 1 - Examples of Merchant Project Sales" /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>Sales of merchant generating facilities during 2004 signaled several trends that illustrate how the power business is evolving. After a nadir in 2002, sales turned up during 2003 and then more than quadrupled during 2004. The backlog of merchant plants for sale is thinning. Buyers and sellers are closing the spreads that led to much talk but few actual sales.</p>
<p>Whether evolution or devolution, the merchant deals done to date show movement to a familiar structure; ratepayers are back at risk. While ratepayers have benefitted from merchant plants, they also paid since competition began with PURPA in 1978, and many of the acquisitions put them at risk for future changes in power values and fuel costs.</p>
<h4><b>The Boost in Deal Volume</b></h4>
<p>More than 18 transactions involving more than 30 merchant power projects are now pending or closed. Examples of these transactions are summarized in Table 1 (<i>see p. 25</i>). This exhibit presents aspects of the buyer, seller, name, location, timing, capacity, fuel, and value associated with each transaction.</p>
<p>The 18 sales involve 102 different power projects and net installed capacity sold of more than 14,350 MW. Reliant's sale of the Orion portfolio to Brascan included 72 hydroelectric projects and without this transaction, the scorecard to date includes 30 projects and an aggregate net capacity sold of approximately 14,000 MW. Nearly all of these are natural-gas-fired combustion, turbine-based projects constructed when the merchant business model appeared to be viable. These sales include 30 percent to 50 percent of the total merchant capacity built during the last five years. While the merchant sector is far from sold off or abandoned, these sales show that substantial progress has been made in that direction. Buyers and sellers are finding acceptable methods of allocating risks, and the spread is closing between bid and asking price.</p>
<p>Three examples demonstrate the evolution of merchant power and events that led to recent sales. First, the sale of the Frederickson plant to Puget Sound Energy closed during mid-2004 and involves an "accidental merchant" with a storied history. The project was developed during the early 1990s by Tenaska and was supported by a power-sales contract with Bonneville Power Administration (BPA). BPA terminated the contract while the project was under construction, and years of litigation and restructuring ensued. BPA became the owner, and EPCOR Power Development of Alberta ultimately purchased the project from BPA. EPCOR completed construction, and operations began during September 2002. Puget Sound Energy (PSE) announced its intent to purchase an interest in this project for $76.4 million plus approximately $4 million for upgrade costs. Closing was contingent upon timely approval of full cost recovery by the Washington State Utilities and Transportation Commission, and PSE's ratepayers now bear the risks associated with the acquisition, as well as power values and fuel costs.</p>
<p>More typical of merchant experience are Brazos Valley and Duke's southeast portfolio. NRG developed Brazos Valley, and construction was well under way during 2002 when NRG became unable to meet its equity funding commitments. The lender group foreclosed during January 2003 and, following much evaluation and a restructuring of their interests, funded the completion of construction during mid-2003. An extensive marketing effort and several false starts ultimately led to Calpine's purchase of the 570-MW project.</p>
<p>Duke Energy North America (DENA) developed numerous merchant projects and had a portfolio of eight projects in four states in the Southeastern Electric Reliability Council (SERC). All eight are natural-gas-fired, five are peakers, three are combined-cycle facilities, and most of their 5,280-MW combined capacity went into service during 2002. As DENA's heavy investment in merchant generation failed to yield current earnings, asset sales began. Lackluster bids forced DENA to write down the value of the plants three times and the portfolio ultimately was sold to KGen Partners (KGgen). In addition, as part of the deal, one of the projects is supported by a power-purchase agreement with Georgia Power. KGen is owned by MatlinPatterson, a distressed-debt-focused fund that also invested in NRG Energy and has a representative on NRG's board of directors.</p>
<p>Standing back, the transactions dicussed here show that sellers are primarily the developers and lenders who invested heavily in merchant generation. Buyers are diverse-utilities, independents and private equity firms. Utilities of various types actually account for most of the transactions. Investor-owned utilities, munis and other entities whose ratepayers will be at risk account for approximately 70 percent of the transactions, 45 percent of the generating capacity and 50 percent of the value exchanged. Among independents, Calpine has been both a buyer and seller. Private-equity firms have spent much time looking for a merchant acquisition; however, few have become buyers. KGen was noted above. Brascan and Centrica have other power interests and experience.</p>
<p>Private equity buyers actually have been more active in pursing generation that involves less risk than merchant operations-either regulated utilities or non-merchant independent power. Texas Pacific Group formed Oregon Electric Utility Co. to pursue acquiring Portland General Electric from Enron. KKR, Blackstone Group, Texas Pacific Group and Hellman &amp; Friedman have joined to purchase the former Reliant unit Texas Genco. AIG, Algonquin, Arclight, Goldman Sachs, Harbert and many others have, and continue to, pursue projects whose revenues are secured by long-term contracts.</p>
<h4><b>Buyer's Market: Finding Value</b></h4>
<p>Merchant sales have been painful experiences for sellers. Continuing with the examples of Frederickson, Brazos Valley and Duke, those interests sold for approximately 79 percent, 68 percent and 20 percent of original cost, respectively. While the range is broad, on average, operational natural-gas-fired merchant projects have sold for approximately 55 percent of the actual total cost to develop and construct. Such discounts are not isolated to completed projects. Some combustion turbines still under warranty and in factory wrap are worth only 50 percent of their actual cost of three years ago. Economic recovery, regulatory changes and new needs for capacity are starting to reverse the slide in some markets.</p>
<p>The $/kW is an often employed and potentially reckless guide to value.<br />Subject to that qualification, prices varied between approximately $90/kW to $790/kW and averaged $225/kW for operating gas-fired plants. Low-value projects tend to be combustion-turbine peakers with heat rates over 11,000 Btu/kWh in regions such as SERC and the East Central Area Reliability Coordination Agreement, which have ample reserve margins and substantial coal and nuclear generation. The Duke GE 7EAs in Georgia, Kentucky, and Mississippi purchased by KGen are examples. High-value projects tend to be combined-cycle facilities with relatively low heat rates purchased by ratepayer-at-risk entities. The purchases by Avista, GenTex, Puget Sound Energy, and city of Brownsville (<i>see Table 1</i>) are examples.</p>
<p>While $/kW is a popular measure of value, a project-specific forecast of net income is a universally employed and more reliable guide to value. Discounted cash flow (DCF) remains the gold standard of valuation. Due to uncertainty surrounding operations, power values, and fuel costs over time, several scenarios and probabilistic Monte Carlo results also are often considered. While a facility currently might be out of the money due to its heat rate and non-fuel variable operating costs, changes in markets over time, and a focus on high-value time periods may support some capital value. For example, such analysis is the only way to support capital value for the DENA and NE&gt; peakers purchased by KGen and American Municipal Power - Ohio.</p>
<p>One of the critical inputs to DCF valuation is the discount rate or rate of return that a buyer requires. As a benchmark, power projects with contract-secured revenues and costs will sell for pre-tax returns of 14 percent to 18 percent. Some high-quality, low-risk projects sell for more aggressive returns, and those with resource risk, technology risk, or that have defects in key supporting agreements demand higher returns.</p>
<p>After tax, the return range for high-quality projects is in the single digits to low teens. For merchants, due to comparatively high risk and complexity, rate-of-return thresholds become less meaningful. For example, buyers might focus on adverse circumstances and bid only what appears to be a break-even price. They may be willing to risk a positive return on uncertain markets. Differences among bids more likely are determined by how they view the risks than the rate of return each requires.</p>
<h4><b>The Implications of Reintegration</b></h4>
<p>Reintegration by regulated utilities through merchant acquisitions is, in many respects, controversial. First, it represents a concentration of ownership and potential loss of the benefits of competitive power markets. Several of the acquisitions by regulated utilities have been controversial for other reasons. Arizona Public Service purchased five projects from its affiliate Pinnacle West, and some allege that the price paid represents a bailout at the expense of ratepayers. Edison's arrangements concerning Mountain View were negotiated and not the results of a broad competitive solicitation for new capacity. A contract with an affiliate also is involved. Interveners in proceedings at the California Public Utilities Commission asserted that the transaction is a bailout, allowed concentration of generation, and reduced the role of independent generators in California.</p>
<p>While the current opportunity to purchase assets for prices below what they cost to construct appears attractive, a focus on discount can miss an important point. Such a focus is backward looking, and value ought to consider the future. Coal-fired and other non-gas assets, for example, might be worth more than they cost to construct because of the fuel diversity and other benefits they provide. As market prices for coal have increased along with gas prices, the values of generating facilities fired by fixed-price coal have increased.</p>
<p>Many existing projects with fully contracted revenues and costs also involve an element of merchant risk. What is contracted now will at some time become merchant, and buyers of contracted projects must consider such project's merchant residual value or "tail." Buyers' methods vary. One approach is to take pure merchant prices today, inflate them forward to the residual period, and then discount them back. Another is to estimate operating margin during the tail and then discount that value back at a rate that reflects higher risk. A third is to apply a conservative multiple to a forecast of earnings during the first year of residual period operations. B&amp;Co has seen 5 times earnings before interest, taxes, depreciation, and amortization (EBITDA) applied to relatively near-term forecasts, and 3 to 4 times EBITDA applied to values 20 and more years in the future.</p>
<p>Finally, the merchant business model is evolving. It has not been entirely abandoned for a return to long-term power contracts that are supported by utility balance sheets, regulatory commissions and ratepayers. While many future projects will be supported by such contracts, and those currently being proposed by Pacific Gas &amp; Electric and the New York Power Authority are examples, hybrids are on the horizon. "Hedged generation" in the lexicon of the deal structure involves projects supported by contracts that track what a project can sell and allow owners and lenders to manage operating margins. Long-term fuel contracts with prices that are arithmetically linked to power values are an example. Wind projects in gas-dominated systems that use long-term gas contracts to hedge power value are another.</p>
</div></div></div><div class="field field-name-field-article-category field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Category (Actual): </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/article-categories/strategy-planning">Strategy &amp; Planning</a></li><li class="taxonomy-term-reference-1"><a href="/article-categories/transactions">Transactions</a></li></ul></div><div class="field field-name-field-members-only field-type-list-boolean field-label-above"><div class="field-label">Viewable to All?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-article-featured field-type-list-boolean field-label-above"><div class="field-label">Is Featured?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-department field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Department: </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/department/business-money">Business &amp; Money</a></li></ul></div><div class="field field-name-field-image-picture field-type-image field-label-above"><div class="field-label">Image Picture:&nbsp;</div><div class="field-items"><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/0501-cvr_3.jpg" width="747" height="1000" alt="" /></div></div></div><div class="field field-name-field-fortnightly-40 field-type-list-boolean field-label-above"><div class="field-label">Is Fortnightly 40?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-law-lawyers field-type-list-boolean field-label-above"><div class="field-label">Is Law &amp; Lawyers:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-above clearfix">
<div class="field-label">Tags:&nbsp;</div>
<div class="field-items">
<a href="/tags/american-municipal-power">American Municipal Power</a><span class="pur_comma">, </span><a href="/tags/arizona-public-service">Arizona Public Service</a><span class="pur_comma">, </span><a href="/tags/avista">Avista</a><span class="pur_comma">, </span><a href="/tags/bonneville-power-administration">Bonneville Power Administration</a><span class="pur_comma">, </span><a href="/tags/bpa-0">BPA</a><span class="pur_comma">, </span><a href="/tags/california-public-utilities-commission">California Public Utilities Commission</a><span class="pur_comma">, </span><a href="/tags/calpine">Calpine</a><span class="pur_comma">, </span><a href="/tags/cash-flow">cash flow</a><span class="pur_comma">, </span><a href="/tags/coal-fired">Coal-fired</a><span class="pur_comma">, </span><a href="/tags/commission">Commission</a><span class="pur_comma">, </span><a href="/tags/dc">DC</a><span class="pur_comma">, </span><a href="/tags/dcf">DCF</a><span class="pur_comma">, </span><a href="/tags/discounted-cash-flow">Discounted cash flow</a><span class="pur_comma">, </span><a href="/tags/duke-energy">Duke Energy</a><span class="pur_comma">, </span><a href="/tags/epc">EPC</a><span class="pur_comma">, </span><a href="/tags/ge">GE</a><span class="pur_comma">, </span><a href="/tags/general-electric">General Electric</a><span class="pur_comma">, </span><a href="/tags/georgia-power">Georgia Power</a><span class="pur_comma">, </span><a href="/tags/goldman-sachs">Goldman Sachs</a><span class="pur_comma">, </span><a href="/tags/investor-owned-utilities">Investor-owned utilities</a><span class="pur_comma">, </span><a href="/tags/it">IT</a><span class="pur_comma">, </span><a href="/tags/new-york-power-authority">New York Power Authority</a><span class="pur_comma">, </span><a href="/tags/nrg">NRG</a><span class="pur_comma">, </span><a href="/tags/nrg-energy">NRG Energy</a><span class="pur_comma">, </span><a href="/tags/pacific-gas-electric">Pacific Gas &amp; Electric</a><span class="pur_comma">, </span><a href="/tags/portland-general-electric">Portland General Electric</a><span class="pur_comma">, </span><a href="/tags/puget-sound-energy">Puget Sound Energy</a><span class="pur_comma">, </span><a href="/tags/purpa">PURPA</a><span class="pur_comma">, </span><a href="/tags/reliability">Reliability</a><span class="pur_comma">, </span><a href="/tags/wind">Wind</a> </div>
</div>
Sat, 01 Jan 2005 05:00:00 +0000puradmin10832 at http://www.fortnightly.comSpecial Reporthttp://www.fortnightly.com/fortnightly/1998/12/special-report
<div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Courtney Barry</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - December 1998</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p> September meeting sends draft legislation back to the drawing board. </p>
<p> Reliability is a self-correcting issue (em if we let it slide, something will happen and it will be corrected ¼ [But] do you want the government to do it?" </p>
<p> That was one industry representative speaking of attempts by the North American Electric Reliability Council (known as NERC) to evolve into a self-regulating reliability organization, or SRRO. But despite a reluctance for more government regulation, the same industry concedes that any transformation will likely require federal legislation, or at least a transfer of oversight to a federal agency, such as the Federal Energy Regulatory Commission. </p>
<p> This past summer the NERC Board of Trustees sought public comments after releasing draft legislation on electric reliability that would restructure the group as an SRRO known as the North American Electric Reliability Organization or "NAERO," the only SRRO in the country. Section 215 of the draft law defines NAERO's threefold mission: 1) develop, promote, and enforce standards to provide for the reliability in operation of the North American interconnected bulk electric system; 2) maintain security for short-term reliability; and 3) assess and encourage long-term adequacy of electric power supply. (See <a href="http://www.naero.org/legislation.html">http://www.naero.org/legislation.html</a>.) </p>
<p> Nevertheless, as seen by the public comments, the draft legislation has done little to dispel the controversy that attended NERC's release last winter of the "Blue Ribbon" report of its Electric Reliability Panel. That report drew comments from more than 30 different interests, including most of NERC's 10 regional councils, various utilities, marketers, state PUCs and trade organizations, as well as the Army Corps of Engineers. (See <a href="http://www.nerc.com/~blue/">http://www.nerc.com/~blue/</a>) </p>
<p> Those comments, plus those submitted on the draft legislation, have revealed a long list of issues surrounding NERC's transformation to NAERO: </p>
<p> • Structure. A national or a regional organization? </p>
<p> • Governance. What role for regional councils? </p>
<p> • States Rights. Can PUCs participate in NAERO, or impose their own reliability rules? </p>
<p> • Congressional Strategy. Should NAERO wait for a comprehensive electric restructuring bill? </p>
<p> • Generation. Should NAERO still monitor and ensure adequacy of supply? </p>
<p> • Standard-Setting. What process to set reliability rules? Use old procedures or those in place at other institutions, such as ANSI or IEEE? </p>
<p> • FERC Oversight. De novo review of technical standards? Or should FERC defer to NAERO? </p>
<p> • Lawsuits. Immunity for violation of NAERO standards? </p>
<p> • Enforcement. Is NAERO both standard-setter and police force? </p>
<p> • Funding. A nonbypassable charge? Who is at risk if costs are not recovered? Are NAERO participants salaried or will they work voluntarily? </p>
<p> Even as NERC ponders its transformation to NAERO, policy may also develop on two additional fronts. </p>
<p> First, during the past year, the FERC has found itself called upon to rule on the efficacy of proposed NERC standards (em whether they are consistent with the FERC's standards for open transmission set down in Orders 888 and 889. In fact, a coalition of power marketers has filed a petition for rulemaking asking the FERC to take a more active role in reliability and to revamp rules to guarantee transmission access on a commercial basis, while ending preferences for so-called native load. </p>
<p> Second, acting on a parallel track, a task force set up by the Secretary of Energy Advisory Board has been meeting regularly to develop policy on reliability to aid the DOE in presenting legislative ideas to Congress. In fact, on Sept. 29, the DOE Task Force issues its final report, Maintaining Reliability in a Competitive U.S. Electricity Industry. That report sets out 28 specific policy recommendations, most of which involve broader and more active supervision by the FERC. (See <a href="http://www.hr.doe.gov/seab">http://www.hr.doe.gov/seab</a>.) </p>
<p> Structure: National or Regional? </p>
<p> Last winter's Blue Ribbon report envisioned a "top-down" national structure for NAERO but left open the exact role of any regional reliability organizations, sparking controversy. </p>
<p> Commenting on NAERO's draft legislation, the Mid-Continent Area Power Pool (MAPP (em one of NERC's regional reliability councils) insists that the role of the regional council should be preserved: "First, all regions are not alike." MAPP stresses that "a wealth of expertise resides at the regions in the staff and committee membership." It adds: "The legislation should not permit the electric reliability organization to delegate its authority. It should require it to do so." </p>
<p> Another regional council, the Southwest Power Pool offers that "NERC should maintain strong, positive working relations and shared responsibilities with regional organizations." The SPP, along with other regional councils, maintains that regional organizations "coordinate a more competitive electricity market, while equitably protecting reliability of service." </p>
<p> On the other side, some tout the notion that independent system operators might take over the role of regional governance. As Carroll Scheer, operations vice president for American Municipal Power of Ohio suggests, "Rather than have regional paper organizations, have regional ISOs that are a part of NAERO and serve as the regional organization. These ISOs would not only control the transmission system, but also would be the control area for generation supply." Scheer's comments go on to state that "funding could be built into the transmission charges under the control of the ISO." </p>
<p> The Electric Consumers Resource Council, which represents 37 members using an estimated 5 percent of all electricity consumed in the United States, is concerned about the regulatory oversight of RROs. Representing ELCON, attorney Sarah D. Schotland questions NAERO's plan for regional implementation of reliability rules: </p>
<p> "This provision," notes Schotland, "subjects NAERO to regulatory oversight but does not subject RROs to equivalent oversight. </p>
<p> "The legislation," adds Schotland, "is ambiguous about two key features of the RROs: [Whether] the RRO Board will meet criteria for independence, not just fairness ¼ and second, [whether] any standard or variance adopted by the RRO will be subject to the same degree of regulatory oversight as that adopted by the national body." </p>
<p> At NERC's September Board of Trustees meeting, the status of various efforts to develop model agreements between NAERO and RROs were reviewed. The board discussed two types of agreements: one for RROs that are separate interconnections and one for RROs that are part of larger interconnections. Model agreements would be reviewed in January 1999 with final approval slated for May 1999. </p>
<p> Further down the line from the RROs, the state commissions, observing the possibility of a national governance, fear the loss of their own authoritative power over reliability and stand ready to defend their turf. The New York Public Service Commission worries that "a lack of clarity or specification in the proposed legislation could be interpreted to provide FERC with the ability to intrude in matters that are state jurisdictional." The PSC adds, "Preserving the states' authority will only enhance system reliability." The State of California agrees and goes a step further, stating that public officials from within the relevant agencies of the states within each interconnection should have a role in the governance of the RRO. </p>
<p> Western states question whether the NAERO plan will account for differences between the Western and Eastern interconnections. </p>
<p> As the Idaho Public Utilities Commission points out, "There are important differences ¼ The Eastern Interconnection more closely resembles a network while the Western Interconnection is dominated by load centers and generation facilities separated by long distances. Reliability standards must accommodate these significant differences." </p>
<p> The Idaho PUC seconds comments offered by Roger Hamilton of the Oregon Public Utility Commission, who says there is a "fundamental electrical reality that the Western Interconnection is, for all practical purposes, separate and distinct from the rest of the North American transmission grid." Hamilton goes on to suggest that the legislation should provide for the creation of a state/provincial 'Western Interconnection Oversight Commission.' </p>
<p> Governance: Who Sits on the Board? </p>
<p> The Blue Ribbon panel had recommended a 21-member board, but with only seven slots reserved for particular classes of stakeholders, such as marketers, transmission owners, power producers, etc. Thus, two-thirds of the board would have "no current ties to the electric industry and represent the public interest on the board." That plan drew criticism from Houston Lighting &amp; Power, among others: </p>
<p> "[We are] concerned that the industry sector will provide the majority of funding to the new organization and only be allowed one-third of the board's representation. Essentially ¼ the majority of board members will not be accountable to those who are providing the majority of the funding for the new organization, and would likely encourage overspending on programs." </p>
<p> The Mid-Continent Area Power Pool agreed: "MAPP is not interested in continuing to be a source of funding for an organization over which it has no management control." </p>
<p> Later, NERC's Governance Task Group eventually agreed to recommend an all-member independent board for the end-state NAERO, with a transition period in which nine new independent members would be added to the existing 37-member board in January 1999. This 'augmented' board would serve until NAERO received approval as a self-regulating reliability organization. </p>
<p> The September board meeting failed to decide the issue. </p>
<p> Mission: To Safeguard Supply? </p>
<p> In its report, NERC's Blue Ribbon panel had preserved a secondary mission for NAERO of assessing and encouraging system adequacy, or the sufficiency of grid resources. That idea drew opposition from the California Public Utilities Commission and the Edison Electric Institute. Both felt that a competitive generation market implied no need for a reliability organization to monitor the adequacy of energy capacity. But some in the industry insist that NAERO should ensure resource adequacy. </p>
<p> Listen to Ralph Bourquin, director of energy supplies and sales for Baltimore Gas and Electric, a member of MAAC (Mid-Atlantic Area Council): "We've had an adequacy standard in the MAAC region quite some time. We think that's a critical piece of the reliability puzzle. To focus only on short-term security without worrying about whether you have enough resources available to even keep the system operationally secure (em to us that's just myopic." </p>
<p> Of course, major power marketers, pushing for competitive markets, strongly disagree. They want to limit NAERO's influence in this area. As Enron states, "although a NAERO-type entity may be needed to ensure the reliability of the short-term grid, NAERO's responsibility should not extend to the reliability and adequacy of long-term generation resources or any ancillary service that can be provided through market mechanisms prompted by competitive price signals." Enron adds, "competitive markets provide forward price signals that provide for the adequacy of long-term supply." </p>
<p> Outlook </p>
<p> By drafting legislation, NAERO apparently has entrusted its restructuring to Congress, which so far has shown little inclination to move on electric restructuring. Ironically, the action seems to have shifted to the FERC recently. </p>
<p> On Sept. 29, the U.S. Department of Energy assigned authority to the FERC under Sec. 202(a) of the Federal Power Act to divide the nation into regional districts to promote interconnection and coordination of electric transmission, and formation of independent system operators. That grant of authority might increase the role of regional ISOs in maintaining reliability. </p>
<p> And, as mentioned, the Sept. 29 report by the DOE task force urged a larger role for the FERC. Among its 28 recommendations, the task force has urged federal review of the existing policies of the regional reliability councils, led by the FERC. It also has suggested that the FERC should develop and implement a consistent national policy on ancillary services, plus a training program for system operators. More importantly, the task force would have the FERC "explore formation of regional regulatory agencies" to focus on enhancing the interstate transmission network, and to ensure a consistent policy to allocate the cost of enhancements between federal and state jurisdictions. </p>
<p> Yet, even as the reports target a greater role for the FERC, the newly emerging competitive sector would redefine the role that the FERC already has. </p>
<p> On Sept. 21, the Electric Power Supply Association filed comments supporting a petition for rulemaking submitted last spring by a coalition of power marketers. (See FERC Docket No. RM95-8-000, March 25, 1998.) That petition would have the FERC create a capacity reservation system for a monetary allocation of transmission access rights. In effect, the FERC would create a market solution to reliability. </p>
<p> According to Jeffrey D. Watkiss, counsel for the petitioners, the petition has also gained the support of the American Public Power Association and Electric Power Supply Association, but at press time the FERC had not yet acted on the initiative. </p>
<p> At its September board meeting, NERC said it would reassess its original draft legislation and continue to work on legislative language to provide a statutory framework for a North American SRRO. That language was to be agreed on during November and submitted to the board by January for approval. From there, NERC planned to seek a broad consensus on this core language, while letting others debate related legislative issues regarding industry restructuring. </p>
<p> Stay tuned. </p>
<p> Courtney Barry is a writer who formerly worked for the General Counsel of the Public Utility Commission of Texas. </p>
<p> Reliability Time Line </p>
<p> 1997 </p>
<p> Jan. 16 DOE Task Force. First meeting. (To help Clinton Administration develop policy.) </p>
<p> May 1 Tagging Rules. NERC's "Operating Policy 3" mandates "tagging" for grid transactions. </p>
<p> Aug. 27 CAPT Complaint. Coalition Against Private Tariffs argues tagging rules violate FERC Order 888. </p>
<p> Aug. 28 NERC Response. NERC says it will modify tagging rules. </p>
<p> Nov. 6 Antitrust Threat. At sixth meeting of DOE Task Force, ELCON's John Anderson hands out legal memo warning that NERC structure violates antitrust law. </p>
<p> Sept. 20 Blue Ribbon Panel. Holds first meeting. Formed to advise NERC on reorganization. </p>
<p> Dec. 22 Blue Ribbon Report. Urges formation of self-regulating reliability organization, with FERC oversight and top-down national structure. </p>
<p> 1998 </p>
<p> Jan. 5 NAERO Deadline. NERC board sets January 1999 as target for restructuring. Creates four "task groups" to study issues. </p>
<p> Feb. 20 FERC Conference. FERC invites comment on how to meld transmission access rules w/NERC reliability standards. </p>
<p> Mar. 25 Marketer Petition. Coalition of power marketers files rulemaking petition, wants FERC to abandon "native load" preference, allocate grid access on for-profit basis. </p>
<p> Mar. 31 Blue Ribbon Comments. Some 30 groups file comments on Blue Ribbon report. </p>
<p> Apr. 7 Tagging Order. FERC resolves CAPT complaint, says it can reject NERC rules that violate Order 888. </p>
<p> Apr. 17 NAERO Task Group Reports. Filed reports reiterate Blue Ribbon findings. </p>
<p> June 5 TLR Rules. NERC seeks certification for "off-path" rules for transmission line loading relief. </p>
<p> June 9 Task Group Comments. Industry comments on NAERO Task Group Reports. </p>
<p> June 12 TLR Approval. FERC notice says industry can apply NERC's off-path TLR rules in Eastern Interconnection pending final decision, raising ire of some utilities. </p>
<p> June 24-25 Midwest Spikes. Turmoil hits Midwest power markets. Some prices reach $7,000/MWh. </p>
<p> June 26 Placing Blame. Attorney Sara Schotland circulates memo to ELCON members noting that TLR rules have "triggered in-fighting" among electric utilities. </p>
<p> July 13 Birth of NAERO. NERC board launches NAERO, releases draft legislation to make NAERO the one and only reliability organization. </p>
<p> Aug. 6 In Congress. Reps. DeLay (R-Tex.), Markey (D-Mass.) introduce H.R. 4432, "Electric System Reliability Act of 1998." </p>
<p> Aug. 17 NAERO Comments. NAERO receives comments on its draft legislation. </p>
<p> Sept. 21 EPSA Endorsement. Electric Power Supply Association endorses power marketer petition filed 3/25/98. </p>
<p> Sept. 24 Price Spike Report. FERC analyzes Midwest price spikes. Finds no evidence of firm curtailments. Warns of shortfalls in generation. </p>
<p> Sept. 29 DOE Delegates. U.S. assigns authority to FERC under Federal Power Act sec. 2029(a) to divide nation into regional districts for grid coordination. </p>
<p> Sept. 29 Mission Ended. DOE Task Force issues final report and disbands. </p>
<p></p>
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Tue, 01 Dec 1998 05:00:00 +0000puradmin9925 at http://www.fortnightly.comLegislative Hot Spots: From Texas to Ohio, New Jersey to Minnesota, Electric Restructuring Games Beginhttp://www.fortnightly.com/fortnightly/1997/02-0/legislative-hot-spots-texas-ohio-new-jersey-minnesota-electric-restructuring
<div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Joseph F. Schuler, Jr.</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - February 15 1997</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"></p>
<p> Perhaps the only political prediction bound to come true this year is that the words ôelectric restructuringö will reverberate in nearly every stateÆs legislative chamber. </p>
<p> So says Matthew Brown, director of the energy project at the National Conference of State Legislatures. </p>
<p> But other factors support BrownÆs prediction. Public Utilities FortnightlyÆs informal survey of most states turned up similar results. Legislators know that the Clinton Administration and the U.S. Congress plan to introduce a federal bill this year. If stateside players donÆt jump in now, they may be pushed in later, the thinking goes. </p>
<p> There are at least eight states to bet on for new restructuring lawsùwith the usual political caveat that anything that can change will. Five states are in the Northeast; three are in the Central U.S. </p>
<p> Of course, other states have a long, quirky chance of deregulating. Pennsylvania, after all, took many by surprise when it enacted comprehensive electric restructuring legislation last Dec. 3 (becoming the fourth state to do so). </p>
<p> But take Nevada. If state Sen. Randolph J. Townsend (R) gets his way, he will restructure the Public Service Commission along with the utility industry. ôTheyÆll both be different when we get done,ö predicts Townsend. </p>
<p> The eight states chosen by Fortnightly were selected for the relative maturity of their commission efforts, special legislative committees and the reports issued by them. The reason being: States that have come this far are likely to be 1997 hot spots. </p>
<p> Besides the usual issues of stranded costs, wholesale-versus-retail competition, and divestiture, what subjects kept repeating in the states surveyed? </p>
<p> Taxes. Consumer concerns. Rural cooperatives. </p>
<p> Co-ops could prove to be the largest roadblocks to restructuring in rural states or be the final support needed to push deregulation into law. </p>
<p> Some believe, for example, that only with the blessing of the 13 co-op Pennsylvania Rural Electric Association would Pennsylvania have passed its legislation. </p>
<p> Taxes have been called ôthe sleeper issueö in some states, but itÆs waking up the lawmakers. Taxes are key for more than half the states surveyed. In summary, legislators are considering eliminating gross-receipts, property or other taxes to lower energy costs and keep utilities competitive. But revenues must be recaptured somehow. There are no quick solutions. </p>
<p> Brown says legislators will introduce more pro-consumer billsùboth in the timing of ôchoiceö rollouts and in the law itselfùbecause they realize, perhaps from bad examples set by other states, that restructuring must benefit all. </p>
<p> Texas likely will be awarded the ôhot spot of the year,ö because its combination of utility, big-business, consumer and political interests should inflame a fight worthy of the recent telecommunications bout. </p>
<p> All three of the largest utilities in Texas walked out of an American Legislative Exchange Council meeting where a model restructuring bill was drafted, says Ross Bell of ALEC. </p>
<p> Says Bell of the upcoming Texas showdown: ôItÆs going to be a battle.ö </p>
<p> Then again, no one said restructuring would be easy. </p>
</p>
<p> Joseph F. Schuler, Jr. is associate editor of Public Utilities Fortnightly. E-mail: <a href="mailto:schuler@pur.com">schuler@pur.com</a> </p>
</p>
<p> Connecticut: </p>
<p> Consumers To Pay Partial IPP and Utility Layoff Costs? </p>
</p>
<p> Wholesale or retail? </p>
<p> That could be debated in the Connecticut Legislature this year, once it reviews the Electric Industry Restructuring Task Force report. </p>
<p> The Connecticut Department of Public Utility Control has guided the task force and its six subcommittees through the arduous process. </p>
<p> For the record, the PUC has said the New England Power Pool should dispatch generation and that wholesale should precede retail competition. The agency also suggested that utilities be able to recoup stranded costs. </p>
<p> The task force report was expected by the LegislatureÆs Energy and Technology Committee Jan. 1. </p>
<p> According to an early draft, it looks like the stateÆs elected officials will receive vague legislative tips and some firm conclusions on a handful of restructuring issues. </p>
<p> Among the conclusions, is a call for non-bypassable charges to pay for the above-market portion of independent power producer, or IPP, contracts and for dislocated utility workers. The report also recommends creating a low-cost capital source, secured by a state pledge of electric customer revenues, to reduce IPP contract costs. </p>
<p> (There are 30 pacts for about 500Êmegawatts of IPP capacity in Connecticut under contract with Connecticut Light &amp; Power Co. and The United Illuminating Co. The contracts range from 2.2Êcents per kilowatt-hour to 18.4Êcents per kWh and extend as long as 26Êyears.) </p>
<p> The Legislature will examine two models: the ôConnecticut Choice Plan,ö and the ôWholesale Plus Model.ö The ôChoiceö plan includes retail competition, allowing a plate of services and providers for customers. Under ôPlus,ö the retail side remains a monopoly; wholesale deals open up the market. </p>
<p> Based on comments from legislators and Sen. John W. Fonfara (D), co-chair of the task force, a retail program could be based on a date or event. This means that if prices were not reduced under the current structure, a retail pilot would kick in. The market would evolve from there based on preset markers. </p>
<p> The consensus seems to lean toward a wholesale model. Fonfara also leans toward wholesale. Utilities donÆt necessarily buy his position. ôIf they get their stranded investment taken care of, theyÆre gone,ö he says. ôTheyÆre ready to jump into retail.ö </p>
<p> His position, he claims, isnÆt pro-utility, but pro-economy. He wants to maintain low rates, not simply chase competition. Some in the debate took their eye off prize, he says. </p>
<p> ôBeing chairman of this committee, IÆm constantly trying to get people to open their eyes and see that thereÆs much more to this issue than whether or not you have retail competition,ö he adds. Fonfara also heads the Energy and Technology Committee. </p>
<p> United Illuminating and Northeast Utilities promote a wholesale plan, but neither have plans for retail choice at this time. Fonfara says he supports NU, but not completely. ôI want to see other things in there. The overall objective should be to lower rates, [and] be competitive with the region and the areas of the country that are competing for the businesses.ö </p>
<p> The task forceÆs other recommendations include: </p>
<p> • Phasing out or eliminating utility taxes. Including gas utilities, gross receipts generate about $229 annually. If gross-receipts taxes arenÆt eliminated, an option is to reduce the commercial tax rate from 5Êpercent to 4Êpercent. The report suggests no solution to make up the revenue. </p>
<p> • Improving utility efficiency and reducing costs through alternative rate regulation, providing performance targets and cost caps ùamong other measures. </p>
<p> • Redefining policy on energy conservation, environment and low-income programs. Obligations would continue under the retail market. Programs would be funded through non-bypassable systems charge. </p>
<p> End-user, business and environmental groups have called for retail competition by July 1, 1998, and include divestiture, trying to reverse the stateÆs go-slow approach. But NUÆs influence with the legislature, and its special contracts with large industrial customers, will weigh against these groups. NU has said it would consider a pilot open-access plan after 2000ùonce stranded costs are recovered. </p>
<p> The state of nuclear affairs in Connecticut could be another dampener to the debate; MillstoneÆs three units are down and Connecticut Yankee will shut down this year. </p>
<p> Then again, politics and persuasion could prevail. </p>
<p> Three years ago, Fonfara tried to start a restructuring task force but couldnÆt convince senate leaders to consider authorizing legislation. At the time, the chairmen of UI and NU told the official: ôWell, we donÆt know where this industryÆs going. We think itÆs a little premature to suggest that competition is a given.ö UI now is saying, letÆs go, letÆs go, Fonfara observes. ôIÆm saying æwait a minute.Æ </p>
<p> ôIÆm meeting with the chairman tomorrow. IÆm going to tell him heÆs ahead of me.ö </p>
</p>
<p> Illinois: </p>
<p> Despite Neutral Dereg Report, Final Legislation Predicted </p>
</p>
<p> ôItÆs our goal to pass legislation to deregulate the industry in Illinois. This year, this session.ö </p>
<p> ThatÆs a quote from state Sen. William F. Mahar (R), made after 18 months of hearings on electric industry regulatory reformùhearings he co-chaired. The deliberations resulted in little consensus, a neutral report and legislative proposals from three groups. </p>
<p> Those weighing in were the Citizens Utility Board, low-cost utility Central Illinois Light Co., and the Illinois Coalition for Responsible Electricity Choice. The ICRECÆs high-cost producers include Commonwealth Edison, and organizations like the ManufacturersÆ Association and the Retail Merchants Association. </p>
<p> Mahar, who introduced the legislation forming the Joint Committee on Electric Utility Regulatory Reform, says none of the restructuring proposals will become law, but he thinks the proposals will lead to compromise. </p>
<p> Com Ed, historically the utility that moves slowest on restructuring issues, attended the Joint Committee hearings. ôThey know that weÆre going to move on this and they know they canÆt drag their feet,ö says Mahar. ôTheyÆve changed their philosophy 180Êdegrees.ö </p>
<p> The legislature meets through May. ôYouÆre on board or not,ö the senator says. </p>
<p> The positions fall along predictable lines. </p>
<p> CUB calls for immediate benefits for all consumers; the breakup of monopolies to insure the cheapest power; no bailouts for bad utility investments; and guaranteed safe, reliable and environmentally sound electric. </p>
<p> CILCO calls for unbundled rates; a cap on electric base rates and fuel-adjustment charges for five years; ôlost-margin chargesö to ensure financial viability; a universal service fund for low-income customers; and an electric revenue-use tax to make sure the Illinois tax structure doesnÆt hurt utilities during competition. </p>
<p> It was in CILCOÆs territory that Illinois became the first state in which end users could shop for electricity, although shopping was limitedùand controversialùin this pilot. </p>
<p> The ICREC calls for pilot programs, then a phase-in of direct access, with the largest customers served first. Access charges would be assessed to customers choosing other-than-utility providers, as would transition charges in the first five years. Charges would provide 100-percent recovery of transition costs. The ICREC also calls for regulatory streamlining so utilities can prepare for competition, perhaps unbundling or selling assets. Other provisions: A universal service fund, and profit-sharing if a utilityÆs rate-of-return exceeds a specified level. </p>
<p> Looking at the three groupsÆ spread of opinion, it is no wonder the Joint Committee was struck dumb after 18 months. </p>
<p> Mahar says it is unlikely utilities will see full recovery of stranded costs and is more likely that consumers will share in the benefits of deregulation. Illinois legislators understand companies must succeed to employ residents, pay taxes and benefit shareholders. ôBut we canÆt guarantee that success,ö Mahar says. </p>
<p> Independent system operators and power pools are unlikely to be addressed in legislation. ôWeÆre not going to focus on all the grand-scale things that you may see coming out of California,ö Mahar says. ôWe donÆt use them as an icon in Illinois.ö </p>
<p> The Legislature looks prone to seeing that the free market is just thatùfree. The transition will happen with ôas little strangleö from the government as possible. If utilities want to unbundle, it appears it will be up to them. </p>
<p> Mahar says it is difficult to predict how tax issues will be addressed. (Generating plants could have less value in a restructured industry.) Illinois wants its utilities to be able to compete with other states. </p>
<p> Throughout the debate, Mahar says, the state body will work in a climate where 95 percent of the public, Legislature and media know nothing about the issue. </p>
<p> Rep. Vince Persico (R), Joint Committee co-chair, expects to reintroduce a restructuring bill this session. After that, there is no predicting who else may get into the act. Chicago Mayor Richard M. Daley, for instance, has requested a copy of a model bill put out by the American Legislative Exchange Council. </p>
</p>
<p> Massachusetts: </p>
<p> Following In CaliforniaÆs Footsteps? </p>
</p>
<p> Massachusetts became the fourth state last year to launch a retail-wheeling pilot, and its fight for full restructuring promises to be as historic, with eight investor-owned and 40 municipal utilities vying to be heard. </p>
<p> As in other states, various agencies were penning restructuring reports. By the end of last year, two detailed plans had been released. The state attorney generalÆs strategy was consistent with a Department of Public Utilities draft issued earlier. </p>
<p> In the attorney generalÆs plan, full retail wheeling for all customers would begin by Jan. 1, 1998. Stranded costs would be recovered over 12 years, with a 2.8-cent-per-kilowatt-hour access charge tacked on in the first three years. Residential customers are guaranteed a 10-percent rate reduction. </p>
<p> ôConsumers Firstö was endorsed by New England Electric System, whose Massachusetts Electric Co. would recover stranded costs through the access charge. NEES is perhaps better structured to handle divestiture than the stateÆs other utilities because of its separate power company, which eventually would have to be sold. The same scenario would play out at each utility. </p>
<p> The DPU draft rule also called for an independent system operator and a separate power exchange, replacing the New England Power Pool. </p>
<p> The DPUÆs final restructuring order in December was expected to include proposed legislation. Still another panel, the Special Committee for Utility Restructuring, co-chaired by Sen. John D. OÆBrien (D) of the Energy Committee, delayed its own December report until February or March. </p>
<p> OÆBrien calls restructuring ôthe most confusing issue in the world,ö but he believes the legislature should vote on the subject this year. </p>
<p> It is clear his uppermost concern is the workers who may not survive the post-monopoly market test. ôWe have to make an agreement on stranded investment that protectsùprimarily from a legislative standpointùnot the rich guys who built these plants and are waiting on their returns, but basically the human stranded investment,ö he says. </p>
<p> On the day he was interviewed, OÆBrien met with organized labor leaders, whose position also is clear: Just donÆt do it. </p>
<p> The restructuring landscape changed somewhat since New England Electric System agreed to divest its generating assets. That is one of the prime issues the attorney general was negotiating with other utilities, seeking to get them to join in with the settlement. </p>
<p> Although the NEES deal guarantees customersÆ savings, it is likely NEES will recoup potential losses later. But the utility must recognize, says OÆBrien, ôthat legislators who go home to their districts have to tell everybody that thereÆs a benefit for everyone.ö </p>
<p> He says the legislature recently passed several pro-business billsùfor manufacturers and the mutual fund industryùso the pendulum is likely to swing back. </p>
<p> That in mind, will stranded costs be shared? </p>
<p> Utilities argue that divestiture rids them of some stranded costs, so recovery should be 100 percent. OÆBrien asks if there is no stranded-cost recovery, who funds labor losses and pension fund investments? </p>
<p> ôFor that alone, stranded costs have to be paid,ö OÆBrien says. ôBut 100 percent? ThatÆs going to be interesting.ö </p>
<p> Tax loss related to devalued plants will be part of the stranded-cost package. Securitization, in which stranded-cost recovery guarantees are used as loan collaterals, was a hot topic in the committee. But constitutional issues may bar Massachusetts from using this stop-gap measure. </p>
<p> Public purpose, environmental and demand-side management issues, which were first addressed in this state, will be debated in legislative chambers. ItÆs likely that the low-income subsidy will be kept on as a wires charge. </p>
</p>
<p> Maine: </p>
<p> Democrats To Carry Dereg Bill With Broad Policy Consensus </p>
</p>
<p> Democrats take control of the Maine legislature this year, but politics are unlikely to influence the electric restructuring debate destined for each chamberÆs floor. </p>
<p> A Public Utilities Commission attorney, a legislative counselor and a ranking Democratic state senator on the energy committee say there will be less partisanship, still more policy agreement and some polemic on key issues. </p>
<p> Restructuring legislation is targeted by party leaders, and the governor, as a major undertaking of the session. Legislators expect to be lobbied by many parties, including MaineÆs largest utilities: Central Maine Power Co., Bangor Hydro-Electric Co. and Maine Public Service Co. </p>
<p> The Democratic influence could be seen with more attention paid to consumers and the environment. </p>
<p> The Joint Standing Committee on Utilities and Energy planned to review PUC recommendations at workshops and other venues after the Jan. 7 start of the legislative session. </p>
<p> ôMy expectation is that we wouldnÆt complete our work until sometime in May,ö says Sen. John J. Cleveland, the ranking Democratic committee member. </p>
<p> That leaves just a month before the end of the session. But Cleveland is confident: ôI expect there will be legislation implemented in æ97. Introduced and passed.ö </p>
<p> According to PUC and legislative sources, broad policy issues have found consensus, mostly because the commission tackled the larger questions in its draft plan issued July 19, 1996. Stranded costs, for example, usually contentious, are not as contentiousùor so say those involved. </p>
<p> In the commissionÆs draft, thereÆs an opportunity, not a guarantee, for stranded-cost recovery, a chance similar to what would occur under traditional regulation. Most sides, in their comments, donÆt object to that solution, says the commission attorney. </p>
<p> The plan allows utilities a ôreasonable opportunityö to recover stranded generation investments before March 1995. Stranded-investment assessments would be made by 2000 and collected by 2006 when full unbundling occurs. </p>
<p> Related to stranded costs, Central Maine Power proposed legislation that would include a securitization scheme, similar to CaliforniaÆs and PennsylvaniaÆs, which would guarantee stranded-cost recovery so that utilities would have ôlegislative collateralö to obtain loans. It is likely to be part of the legislatureÆs restructuring debate. </p>
<p> The Draft Plan for Electric Industry Restructuring (Docket 95-462) would introduce customer choice and retail competition by January 2000. Customers could aggregate. Utilities would have to transfer rights to market output of their contracts with independent power producers that are qualifying facilities, or ôQFsö. Legal obligations under such contracts wouldnÆt be affected. (This issue has generated utility opposition.) </p>
<p> All end users would have access to competitive suppliers, but transmission and distribution companies would be required to have a ôstandard offerö available to end users who donÆt wish to participate. </p>
<p> The PUC also endorsed a New England-wide independent system operator and the evolution of the New England Power Pool into a voluntary power exchange. </p>
<p> Where problems in drafting legislation might arise, according to sources: </p>
<p> • Timing. The draft proposes 2000 as the rollout year. Some legislators are pushing for an earlier date. </p>
<p> • Divestiture. The three major utilities may be split on this issue, as Central Maine is the only utility that owns a fair amount of generation. Also, divestiture of generating assets seems to be an issue when it comes to the ability of transmission and distribution, ôT&amp;D,ö utility affiliates to be in the retail marketing business. </p>
<p> • QFs. Who pays for these contracts? Do they remain with the T&amp;D utility or are they transferred to an unregulated generating company? </p>
<p> • Environmental safeguards. Because of clean air issues with coal plants in the mid-West sending airborne pollutants east, Maine could consider a moratorium on buying power from these plants. </p>
<p> Cleveland adds that he suspects there would be wires charges for conservation and environmental measures, and for providing power to low-income customers. </p>
<p> Energy battles in Maine usually pit utility lobbyists and paper companies against consumer groups. But this time around, big paper and consumers are working closely because of similar interests. The two groups met throughout the commissionÆs draft process. </p>
<p> The commission attorney notes that politicians, meanwhile, need to stick to brushing broad strokes. ôThere could be a fight on any aspect of this if the Legislature decides it wants to write in the details,ö he says. </p>
</p>
<p> Minnesota: </p>
<p> StateÆs Cost Advantage Leaves Legislators Wary of Change </p>
</p>
<p> Two committee chairs in the state Legislature have predicted there will be no 1997 electric restructuring laws in Minnesota, but several new bills were expected, and politicians could act despite the forecasts. </p>
<p> Lobbies or legislators intent on getting bills passed could prompt action. </p>
<p> Sen. Dan Stevens (R), for instance, was considering introducing a model proposed by the American Legislative Exchange Council, according to Ross Bell of ALEC. The senator, on the Environmental and Natural Resources Committee, helped the national group draft the bill at a December meeting. </p>
<p> The state Department of Public Service also submitted a proposal late last year to the governorÆs office. A bill could follow, at the administrationÆs prerogative. </p>
<p> Sources say the governorÆs legislation would include a five-year phase-in of competition, starting with industrial users. An exit fee would be used to pay a percentage of stranded costs. </p>
<p> Betsy Engelking, principal analyst at the Public Utilities Commission, says that from what Sen. Steven G. Novak (D) indicates, a bill will come from his panel only if stakeholders reach agreement. Novak chairs the Jobs, Energy and Community Development Committee. </p>
<p> In the House, Rep. Loren G. Jennings (D), chair of the Regulated Industries Committee, is equally shored up against change. ôI donÆt think we need to go very fast in Minnesota,ö he says. ôWe have very reliable and low-cost energy here in the upper mid-West.ö </p>
<p> Other bill authors include Northern States Power Co., Minnesota Power &amp; Light Co., and environmentalists. </p>
<p> NSP falls on the side of the Minnesota Energy Consumers, Minnesota Chamber of Commerce, and the PUC, which are all pushing competition, although the PUC and NSP donÆt see eye-to-eye on stranded costs. Interestingly, stakeholders havenÆt debated stranded costs much, since generation is viewed to be competitive. </p>
<p> On the other side of the deregulation fight is the Restructuring Alliances, which include cooperatives, municipal utilities, environmentalists, utility labor and senior citizens, all advocating ôgo slow.ö </p>
<p> ôWholesale first,ö they say. The PUC published a wholesale report Oct. 18, recommending that wholesale competition barriers be removed. </p>
<p> But, on the retail side, during hearings that ended Dec. 12, the PUC learned that rural and small communities were concerned about higher rates. Local chambers of commerce are split with the state chamber. Co-ops, too, are mildly divided. The United Power Association is for retail competitionùat its management level if not at the board level. </p>
<p> Before retail competition comes, Minnesota, like other states, will need to resolve the tax ramifications of restructuring. The state has a 4-percent machinery tax, the highest personal property tax of any industry there. The tax brings in close to $200 million annually. The Department of Public Service has been helping the Department of Revenue study the problem. A report was to be filed with the Legislature Jan. 15. </p>
<p> Last year, a potential cogenerator received a tax exemption from the legislature based on unit efficiency. The utilities took issue and Legislature promised to hear their claims. </p>
<p> Several proposals have been made to solve the overall tax problem, including a 6-percent energy tax for generators, including municipals and co-ops. </p>
<p> Jennings says he proposes to remove machinery tax and replace it with a retail meter tax. So if deregulation comes, power pumped in from out of state will be taxed similar to local energy. </p>
<p> Property taxes paid by power stations to local municipalities will be another issue. Jennings says that with deregulation, those plants need to be competitive with out-of-state generators, which can be done through a diminished tax. </p>
<p> ôThose local units of government who have relied heavily on the taxesùthose power stations will shut downö if thereÆs no change, he says. ôAnd theyÆll have no taxes. So is half the pie that youÆve enjoyed for a long time better than no pie?ö </p>
<p> MinnesotaÆs legislative session started Jan. 7. It runs through mid-May. </p>
</p>
<p> New Jersey: </p>
<p> Taxes, Then Energy Master Plan Face Lame Duck Legislature </p>
</p>
<p> This year is the ôSuper Bowlö of state politics in New Jersey. Every seatùthat of its governor, assemblymen, senatorsùis up for grabs. This doesnÆt bode well for burning political debate on electric restructuring. </p>
<p> ôIn an election year, stranded costs could be a tough issue,ö says a legislative observer. </p>
<p> But deregulation has been rumbling around the Board of Public Utilities for years, even if, as Assemblyman Richard H. Bagger (R) says, ôThere has been in the New Jersey legislature no discussion of industry restructuring at all.ö </p>
<p> A BPU draft report to be released for comment before the start of this yearÆs legislative session is guaranteed to kick off some action. The BPU expects to make final changes to its Energy Master Plan by March. </p>
<p> The plan will be used as a platform for legislative recommendations. The recommendations would be the first concrete suggestions since a few half-hearted restructuring bills died in committee last year. (One, a pro-consumer bill introduced by Assemblyman Neil Cohen (D), would have required the BPU to provide equal access to market rates for consumers and fair competition for electricity generators.) </p>
<p> The Master Plan brought together 30 business, environmental, utility, consumer and other groups. When finishedùit was due in October 1996ùit will address asset divestiture, stranded costs, independent system operators and retail wheeling, among other topics. </p>
<p> According to various sources, one element involves retail versus wholesale competition. Some percentage of stranded investment will be funded through a transmission charge that everyone will pay, regardless of who generates the electricity. New JerseyÆs treasurer has talked about using state-bonding to fund the charge. It would be a transitional cost. </p>
<p> But the slipperiest banana peel New Jersey faces during this legislative calendar is energy tax reform. </p>
<p> Gov. Christine Todd Whitman (R), state Treasurer Brian W. Clymer and BPU President Herbert H. Tate were working with leaders in the Assembly and Senate to overhaul the tax system. </p>
<p> The three administrative offices have proposed repealing New JerseyÆs 13-percent utility (gross receipts) tax, replacing it with a 6-percent sales tax on all retail energy sales. Currently, in New Jersey, only natural gas is sold retail through nonutilities. The proposal also would slap the 9-percent corporate business tax on utility profits. </p>
<p> The two new taxes would together make up half of the more than $900 million raised by gross-receipts tax. Some 70Êpercent of that figure is used for municipal aid. The proposal would phase in over 7Êyears; utilities have protested that is too long. </p>
<p> There may be a ôgrandfatheringö of existing generators, and independent power producers might not be taxed under the changes. </p>
<p> The governor wants the measures passed in the first quarter so tax payments arrive by July 1, which would be in time for the stateÆs fiscal year. </p>
<p> Bagger, who sponsored the flex-rate and alternative rate-making bill that became law in 1995, says restructuring legislation wonÆt come without energy tax reform. During 1997, he says heÆll be meeting with legislators to sketch a proposal for industry restructuring. </p>
<p> ôIÆd be surprised if it were to pass during 1997, but we just canÆt let time go by here,ö Bagger says. ôWeÆve got to start the debate so that maybe, realistically, we pass the energy tax reform in æ97 and pass a major industry restructuring bill during 1998ùin early 1998.ö </p>
</p>
<p> Ohio: </p>
<p> The Buckeye Two-Step: Taxes First </p>
</p>
<p> Electric restructuring in Ohio promises to go nowhere unless legislators first discover a way to fill the hole created if utilities were taxed at the same rate as other businesses. </p>
<p> Some have projected a gap in public school financing of $150Êmillion. That could devastate schools where power plants operate. </p>
<p> ôItÆs just a huge number,ö says Rep. Priscilla D. Mead (R), 1996 vice chair of the HouseÆs Public Utilities Committee and its expected 1997 chair. ôIÆve heard numbers bigger than that.ö </p>
<p> Utilities donÆt want to leave schools hurting. And since property tax is geographic, there is disparity in funding. In northern Ohio, by the nuclear plants, there are modern school facilities, which is not the case elsewhere in the state. </p>
<p> At the end of last year, the state was awaiting an Ohio Supreme Court decision regarding the constitutionality of state school financing. </p>
<p> ôTherefore the Legislature has been loathe to touch the issue until there is some response from the court,ö Mead says. </p>
<p> She expects the first six months of the 1997 session to be spent on school financing, fundamental to deregulation. Debaters also will examine stranded investments and costs. </p>
<p> Once a tax solution emerges, legislators will move on to restructuring. Already, parties are choosing sides. </p>
<p> The speaker of the House has two yearsÆ tenure and thereÆs an incoming senate president. They were to meet with the governor early in the year to mold a legislative strategy to deal with restructuring. They could form a select committee, run a bill through both chambers, or call for a number of bills. </p>
<p> Says Mead: ôPutting it in music terms, the governor dances to big band music. The speaker of the House prefers the minuet. The president of the Senate dances to rock and roll. WeÆve got to get them dancing in one tempo.ö </p>
<p> Mead will choreograph the process. She takes no position and promises to deliver ôthe best legislation in the countryö that serves consumers and corporations. </p>
<p> A colleague who will take a position is Rep. Ron Amstutz (R), who introduced H.B. 653 last year to give customers choice in buying electricity. The bill was to be reintroduced this year with a new bill number. It could be substantially rewritten, says Dick Kimmins, a Public Utilities Commission spokesman. </p>
<p> The bill, said to have bipartisan support, calls for direct access for all customers by Jan. 1, 1998 and sharing of stranded costs. It also calls for recovery of transition costs incurred by electric distribution companies, through distribution surcharge rates. </p>
<p> The bill has the backing of end-user groups and American Municipal Power-Ohio Inc. </p>
<p> Utilities, meanwhile, were split on the bill. American Electric Power Co. Inc. and Cinergy Corp. support retail wheeling. The Ohio Council of Retail Merchants is on the same side </p>
<p></p>
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Sat, 15 Feb 1997 05:00:00 +0000puradmin9996 at http://www.fortnightly.com